WSJ:New Zealand Dollar Down Late After RBNZ Governor Comments
By Lucy Craymer
WELLINGTON, New Zealand--The New Zealand dollar was lower late on Thursday after the central bank governor said it will sell more of the local unit.
It won't immediately raise interest rates to curb rising house prices but will sell more currency to cool an appreciating kiwi that is making exports more expensive, Reserve Bank of New Zealand Governor Graeme Wheeler said. The New Zealand dollar fell to US$0.8098 after the comments.
The New Zealand dollar was last at US$0.8117 from at US$0.8064 late on Wednesday while it fell to A$0.8384 from A$0.8443.
"It was a dovish. He said two things that stuck out to me: They might intervene again and the likely use of macro tools to slow housing down means they don't have to push up the OCR," Westpac Bank forex strategist Imre Speizer said.
The New Zealand dollar pared some of its early losses, however, after building-consent data for April. Construction approvals were up 18.5% on month and 42.7% on year, Statistics New Zealand said on Thursday. With volatile apartment data stripped out consents were still up 12.8% on month and 41.1% on year.
A Reserve Bank statement that it had spent NZ$256 million in "intervention" to cool the kiwi was seen as an anticlimax particularly by the market. "We wanted to see a little bit more bite. Talk is cheap," HiFX senior trader Dan Bell said. "But the fact that there was only NZ$250 million has made everyone think it is a little bit of a joke."
New Zealand government bonds due April 2015 rose 2 basis points to 2.63% while April 2023 bonds were up 2.5 basis points at 3.62%. A disappointing New Zealand government bond tender earlier in the session weighed on prices, a local trader said.
The New Zealand Debt Management Office sold NZ$120 million of April 2020 bonds at an average yield of 3.3182%. Prior to the tender the yields were as low as 3.27%.
