As European trading began the New Zealand Dollar remained in a stronger position against the Pound and ‘Greenback’.
Overnight the ‘Kiwi’ was barely flustered by remarks concerning the currency’s relative strength and the dangers its performance poses to economic growth.
During an interview in Hong Kong, New Zealand’s Finance Minister Bill English was quoted as saying that the New Zealand Dollar is a ‘bit too high’ and that a stronger exchange rate ‘makes it difficult for our economy to rebalance’.
As it stands the ‘Kiwi’ is performing better than any other major currency, largely as a result of the Reserve Bank of New Zealand being the first developed-nation central bank to increase interest rates.
Earlier this month the NZD to USD exchange rate achieved an 11-month high with the New Zealand dollar reaching multi-week and multi-month highs against several of its other most traded peers.
Unless the RBNZ introduces an abrupt reversal of fiscal policy or local data takes a dramatic turn for the worse, the ‘Kiwi’ is likely to continue trading at elevated levels as the central bank reins in stimulus.
However, while the New Zealand Dollar to Pound exchange rate is enjoying a bullish relationship, the NZD/AUD exchange rate softened overnight as the Australian Dollar was boosted by upbeat comments issued by Glenn Stevens, Governor of the Reserve Bank of Australia.
An absence of influential UK economic news may well restrain GBP to NZD movement as the European session continues.
Later today volatility could be inspired by New Zealand’s trade balance data.
In January New Zealand recorded a third consecutive trade surplus thanks to surging exports to China. The surplus stood at 306 million New Zealand Dollars, a January record, and economists will be hoping for another strong result for February.
Last month economist Anne Boniface said of the trade report; ‘The strength of Chinese demand for New Zealand exports continues to be a feature of trade data. Strong demand is leading to high international prices for New Zealand’s key commodity exports, and providing a significant income boost for exporters. We expect this to flow through the broader New Zealand economy in a myriad of ways over the coming year, including via a boost to consumption and investment spending.’
Economists have forecast that New Zealand’s trade balance came in at 600 million New Zealand Dollars in February. If the result meets or exceeds these expectations additional GBP/NZD declines could occur.
Tomorrow’s UK retail sales figures are also likely to have a considerable impact on the Pound to New Zealand Dollar exchange rate before the weekend.
A month-on-month sales gain of 0.5 per cent is expected.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8606,
New Zealand Dollar,,Euro,0.6225,
New Zealand Dollar,,Australian Dollar,0.9354,
New Zealand Dollar,,Pound Sterling,0.5203,
US Dollar,,New Zealand Dollar,1.1620 ,
Euro,,New Zealand Dollar,1.6056 ,
Australian Dollar,,New Zealand Dollar,1.0715 ,
Pound Sterling,,New Zealand Dollar, 1.9212,
[/table]
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