8 May 2014
NZD/USD likely to move toward 0.83 in H2 2014 - UBS
FXStreet (Córdoba) - The UBS analyst team, continues to believe that current NZD/USD levels are unsustainable, and expect a move towards 0.8300 in the second half of this year.
Key Quotes
“The Reserve Bank of New Zealand Governor Graeme Wheeler warned about the high NZD exchange rate in a speech on Wednesday. He reiterated that ‘The Reserve Bank considers that the exchange rate is overvalued and does not believe its current level is sustainable’. He signaled that a high NZD exchange rate, to the extent that it depresses inflation, would affect the extent and speed of policy rate hikes”.
“Governor Wheeler also hinted at the possibility of FX intervention to weaken the NZD ‘if the currency remains high in the face of worsening fundamentals, such as a continued weakening in export prices’.”
“We continue to believe current NZD/USD levels are unsustainable, and expect a move towards 0.83 in the second half of this year, when the Federal Reserve ends its quantitative easing program and allows USD strength to start gaining momentum”.
Key Quotes
“The Reserve Bank of New Zealand Governor Graeme Wheeler warned about the high NZD exchange rate in a speech on Wednesday. He reiterated that ‘The Reserve Bank considers that the exchange rate is overvalued and does not believe its current level is sustainable’. He signaled that a high NZD exchange rate, to the extent that it depresses inflation, would affect the extent and speed of policy rate hikes”.
“Governor Wheeler also hinted at the possibility of FX intervention to weaken the NZD ‘if the currency remains high in the face of worsening fundamentals, such as a continued weakening in export prices’.”
“We continue to believe current NZD/USD levels are unsustainable, and expect a move towards 0.83 in the second half of this year, when the Federal Reserve ends its quantitative easing program and allows USD strength to start gaining momentum”.