Bloomberg News

Kiwi Reaches Record Versus U.S. Dollar After Policy Meeting

June 09, 2011

June 9 (Bloomberg) -- New Zealand’s dollar reached a record versus the dollar after the nation’s central bank said commodity prices remain “very strong” and interest rates will rise within two years.

The so-called kiwi gained against all 16 of its most-traded counterparts after the Reserve Bank of New Zealand left its benchmark Official Cash Rate unchanged at a record-low 2.5 percent today. The decision was predicted by all 15 economists surveyed by Bloomberg News. Australia’s dollar rose, erasing earlier losses, as stocks and commodities advanced.

“The central bank’s statement was hawkish and effectively allows for a December hike,” said Imre Speizer, a market strategist in Auckland at Westpac Banking Corp., Australia’s second-biggest lender. “It’s bullish for the kiwi dollar.”

New Zealand’s dollar rose 1.6 percent to 82.85 U.S. cents at 12:36 p.m. in New York, touching 83.02, the highest level on record. It advanced 2 percent to 66.438 yen.

Australia’s dollar was little changed at $1.0634 from $1.0623 yesterday. It earlier dropped as much as 0.6 percent. The currency was at 85.236 yen from 84.88 yen. The Aussie dropped to NZ$1.2834 from NZ$1.3031, after touching NZ$1.2809, the lowest since Jan. 28.

“A gradual increase in the OCR over the next two years will be required,” Governor Alan Bollard said in a statement accompanying the decision. “The pace and timing of increases will be guided by the speed of recovery.”

Bollard said that the rise of the local currency following today’s Monetary Policy Statement was an “over-reaction”, in a Parliament hearing in Wellington today.

The Aussie earlier weakened after the statistics bureau said the nation added 7,800 jobs in May, while losing 22,000 full-time positions. That compared with the median estimate for a 25,000 increase in a Bloomberg News survey of 25 economists.

--With assistance from Candice Zachariahs in Sydney. Editor: Dave Liedtka

To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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