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14 Jun 2013
Flash: RBNZ looks to hold sway over NZD – BNZ
FXstreet.com (New York) - Aside from USD sentiment, RBNZ policy will have some influence on sentiment toward the NZD.
This week the RBNZ reiterated its discomfort with the ‘overvalued’ NZD despite the 7% decline in the NZ TWI since April. The strong NZD on one hand, and house price inflation on the other is the overarching dilemma for the RBNZ.
According to the BNZ Research Team, “While it would clearly like to see further declines in the NZD, the NZ TWI (currently 73.40) is already some way below the Bank’s forecast average level for the rest of the year (77.40). Therefore, if house prices inflation runs above the Reserve Bank’s expectations for moderation, and domestic momentum generally builds a head of steam, the Bank may have little choice but to respond with OCR hikes.”
This week the RBNZ reiterated its discomfort with the ‘overvalued’ NZD despite the 7% decline in the NZ TWI since April. The strong NZD on one hand, and house price inflation on the other is the overarching dilemma for the RBNZ.
According to the BNZ Research Team, “While it would clearly like to see further declines in the NZD, the NZ TWI (currently 73.40) is already some way below the Bank’s forecast average level for the rest of the year (77.40). Therefore, if house prices inflation runs above the Reserve Bank’s expectations for moderation, and domestic momentum generally builds a head of steam, the Bank may have little choice but to respond with OCR hikes.”