26 Sep 2013
Kiwi will continue to strengthen on rate hike expectations
FXstreet.com (London) - The Kiwi dollar has continued to strengthen on expectations that its central bank will be the first of the majors to hike interest rates.
The Kiwi strengthened overnight against the US thanks to a rally in Asian markets. It broke a two-day run of declines as US debt ceiling concerns weigh on markets, cutting demand for higher yielding currencies.
The Kiwi dollar has climbed steadily since the start of the month, but it could have a lot further to travel in coming months.
As US and UK central bankers fall over each other to defend their ultra-loose monetary policies, the RBNZ is odds-on to raise interest rates by the end of the first quarter of next year.
The Kiwi cash rate currently sits at a record low of 2.5 percent.
In his first year as RBNZ governor, Graeme Wheeler made us of loan curbs to target accelerating real estate prices and inflation without over-strengthening the Kiwi dollar.
Wheeler also told a parliamentary select committee that the central bank had been intervening to sell the Kiwi dollar and keep strength under control.
But as Australia looks set to cut its base rate further than its already record low of 2.5 percent, should Wheeler hike rates, he will stick out as a hawk in a flock of doves, and will be challenged to deal with NZD inflows.
The Kiwi strengthened overnight against the US thanks to a rally in Asian markets. It broke a two-day run of declines as US debt ceiling concerns weigh on markets, cutting demand for higher yielding currencies.
The Kiwi dollar has climbed steadily since the start of the month, but it could have a lot further to travel in coming months.
As US and UK central bankers fall over each other to defend their ultra-loose monetary policies, the RBNZ is odds-on to raise interest rates by the end of the first quarter of next year.
The Kiwi cash rate currently sits at a record low of 2.5 percent.
In his first year as RBNZ governor, Graeme Wheeler made us of loan curbs to target accelerating real estate prices and inflation without over-strengthening the Kiwi dollar.
Wheeler also told a parliamentary select committee that the central bank had been intervening to sell the Kiwi dollar and keep strength under control.
But as Australia looks set to cut its base rate further than its already record low of 2.5 percent, should Wheeler hike rates, he will stick out as a hawk in a flock of doves, and will be challenged to deal with NZD inflows.