The New Zealand dollar rose to its highest level in one week against the dollar after the Reserve Bank of New Zealand hiked interest rates and revealed it would continue doing so in order to manage the inflationary pressures.
The kiwi rose to $0.8638 after the nation’s central bank increased the interest rates from 2.75 percent to 3 percent as expected by most analysts. The kiwi was last up 0.4 percent against the dollar at $0.8624.It also gained against other major currencies such as euro, the Australian dollar and yen.
However, the market is of opinion that the kiwi may not advance much.
“We believe further NZD appreciation is likely to be capped within a cent of current rates as the tightening cycle is fairly priced,” Annette Beacher, a Singapore-based head of Asia-Pacific research at TD Securities told Reuters.
Separately, the Turkish lira gained 0.9 percent to its highest in over two weeks at 2.1308 per dollar as of 3:18 p.m. in Istanbul. The currency has advanced 9.6 percent in the last three months, making it the best performing of the 24 emerging-nation currencies monitored by Bloomberg.
Yields on central bank’s two-year notes plunged nine basis points to 9.75 percent. In January, the central bank hiked the benchmark rate to 10 percent after the lira hit a record low of 2.39 versus the dollar.
The Central Bank of the Republic of Turkey’s monetary policy committee maintained the borrowing rate at 10 percent on Thursday. It said that “the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook.” To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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