The New Zealand dollar slid against all its major counterparts amid speculation the Reserve Bank will make comments aimed at curbing the currency’s strength as officials set monetary policy at a meeting tomorrow.
The nation’s two-year interest-rate swaps fell for the first time in a week even after data showed building approvals surged to a 4 1/2-year high last month. Demand for Australia’s dollar was supported as Asian stocks rose before the Federal Reserve concludes a two-day policy gathering.
“New Zealand’s economy is relatively resilient, and policy makers dislike a stronger currency because of its effect on exports,” said Satoshi Okagawa, a senior global markets analyst in Singapore at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest financial group by market value. “The New Zealand central bank may say something” to help limit the kiwi’s advance, he said.
New Zealand’s dollar declined 0.4 percent to 83.59 U.S. cents as of 4:39 p.m. in Sydney after rising 0.7 percent yesterday. The so-called Aussie slid 0.1 percent to $1.0468 following a 0.6 percent gain.
Australian Prime Minister Julia Gillard today said the nation will hold an election on Sept. 14.
Statistics New Zealand said today that permits for dwellings rose 9.4 percent from November to 1,566 in December, the highest since May 2008. Economists had forecast a 6 percent increase.
The kiwi completed a fourth annual gain last year among a basket of 10 developed-market currencies, according to a Bloomberg Correlation-Weighted Currency Index. It surged 26 percent in the four years through Dec. 31.
Two-year swap rates in New Zealand fell one basis points to 2.88 percent after reaching 2.91 percent yesterday, the most since April 23. The Reserve Bank of New Zealand will probably hold the official cash rate unchanged at 2.5 percent, all 15 economists surveyed by Bloomberg forecast.
Data on Jan. 18 showed the country’s consumer prices fell 0.2 percent in the three months ended Dec. 31 from the third quarter, while the central bank expected a 0.1 percent increase.
“The recent gains in the New Zealand dollar exchange rate and downside inflation surprises will compel the RBNZ to soften its commentary on future inflation,” Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), wrote in a research note today.
Federal Reserve Chairman Ben S. Bernanke will push on with purchases of $40 billion a month of mortgage bonds and $45 billion a month of Treasuries, according to a Bloomberg poll of 44 economists. The Federal Open Market Committee will renew its commitment to the so-called quantitative easing program during its meeting today, economists forecast.
The New York-based Conference Board said yesterday that its gauge of U.S. consumer confidence slid in January to the lowest since November 2011.
“Given the recent softening that we’ve seen in some of the U.S. data, the likelihood is that the FOMC will be committed to the QE policy for the time being,” said Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. “That will probably provide some support for the Australian dollar.”
The MSCI Asia Pacific Index (MXAP) of shares advanced 0.6 percent, boosting demand for currencies linked to global growth. The yield on Australia’s benchmark three-year note rose about one basis point to 2.876 percent after earlier touching 2.898 percent, the highest since Aug. 16.
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