New Zealand Dollar, also known as Kiwi, the major currency of New Zealand has jumped up against most of its major peers before the data forecast which is expected to show that building permits will rise to a figure that’s the highest in the last 5 years. Incidentally, the Central Bank of New Zealand has already stated that any sort of boom in the housing industry will force it to increase the interest rates.
Kiwi has been able to hold to the longest stretch of weekly gains in the last 2 years against the Australian Dollar as well on bets that the spread to the benchmark rate of the Reserve Bank of Australia will narrow down further. Apart from that, Kiwi was able to extend a weekly advance against the greenback as well after the data coming out on US economy showed that the same grew less than what was expected out of it. On the other hand, the Australian bond yields drop to the lowest level since last November as well.
According to the Chief Currency Strategist of the Westpac Banking Corp., Robert Rennie, under current situation, inflation outlook is not acting as a constraint on the Reserve Bank of Australia. When it comes to New Zealand, the Central Bank is becoming more concerned with each passing day on the possible impact of housing data. Rennie added that the risk of the Aussie-Kiwi challenging the NZ$1.20 mark is constantly increasing.
On today, Kiwi has been able to increase by 0.5% against USD and it is currently priced at 85.19 US Cents. The currency has extended the 0.7% gain experienced on last week. When it comes against Australian Dollar, Kiwi is more or less unchanged on today at NZ$1.2123. The Australian Dollar has increased by 0.5% and is currently priced at $1.0328.
The 10-year Government bond yield of Australia has declined by 8 basis points and is currently at 3.08%, marking its lowest figure since 19th November.
According to the economists, the housing approvals of New Zealand will increase by 2% for March to the highest level since April, 2008. Incidentally, the actual figures will release on tomorrow. Graeme Wheeler, the Governor of Reserve Bank of New Zealand, stated that the bank doesn’t intend to see any financial or pricing stability being compromised because of the housing figures getting far ahead of supply.