The New Zealand dollar has surged nearly 10 percent in the past month alone, adding to the drag on an economy battling weak commodities and slack demand from China and keeping the heat on the central bank to lower interest rates further still. While the Reserve Bank of New Zealand (RBNZ) is widely expected to pause this month after three rapid-fire cuts in interest rates, pressure is already mounting for the central bank to deliver more easings.
The Federal Reserve is baulking at even taking a baby-step towards normalising US monetary policy, the European Central Bank has all but promised an expansion of its stimulus program and the Bank of Japan is also expected to do more. As a result, the dollar, euro and yen have come under renewed pressure. Against this backdrop, just the whiff of a steady policy outcome at this month's policy review was enough to help the kiwi roar back from a four-year trough, as investors facing diminishing returns elsewhere target New Zealand's still-attractive yields.
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