The New Zealand Dollar rose to its highest level since mid-2011 today after trade surplus rose sharply, while comments from the Deputy Governor of the Reserve Bank of New Zealand suggesting limits to curb rising house prices may be reduced as borrowing costs increase.
The euro continued to decline for the third consecutive day, touching an almost one-year low against the New Zealand dollar, which rose 0.9 percent to a two-and-half year high of $0.8680.
“The trade surplus is supportive, but we have also had comments from the RBNZ’s Spencer, discussing under what conditions they might decide to remove the macroprudential measures on housing,” Ian Stannard, a London-based strategist with Morgan Stanley told Reuters.
“That may let inflation rise and also suggests that they might tighten policy as well.”
Trade surplus hit a record-high last month, its highest since April 2011, as dairy exports to China surged. The Deputy Governor of the Reserve Bank of New Zealand Grant Spencer disclosed that the cap on low deposit, very risky home loans are valued up to 50 basis points in raising interest rates, which began increasing early this March.
Grant also revealed that the lending caps that were set in October had eased upward pressure on the local currency, and reaffirmed that they aren’t meant to be permanent.
In other news, the Norwegian crown touched a 10-day peak versus the euro, after the nation’s central bank maintained its rates for 2014 and 2015, much to the surprise of some investors who were expecting it to loosen its monetary policy.
To contact the reporter of this story; Jonathan Millet at email@example.com