New Zealand dollar outlook against British pound is rangebound as the issue of currency devaluation is raised at RBNZ
The New Zealand dollar (Currency:NZD) is surprisingly static in late morning trade; with all the commotion being witnessed across the currency markets today we would have expected more excitement:
The pound to New Zealand dollar exchange rate is 0.05 pct in the red at 1.9607.
The euro to New Zealand dollar exchange rate is flat at 1.6697.
The New Zealand dollar to US dollar exchange rate is flat at 0.7989.
NB: The above are wholesale quotes; your bank will affix their own discretionary spread to the numbers. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please learn more here.
Richard Driver at CaxtonFX points out that support for the New Zealand currency was realised in the wake of the RBNZ rate decision:
"RBNZ leaves rates unchanged and noted an uptick in NZ growth, though reiterated willingness to intervene in FX.
"In terms of commentary though, Governor Wheeler was broadly positive about the global economic climate, while he sounded satisfied with NZ growth (he estimated NZ GDP growth is around 2.0% at present).
"Sterling is trading at 1.97 and more range-bound trading is likely."
According to Joshua Mahony the New Dollar's devaluation could be temporary:
"The decision was largely expected given the strong devaluation of the kiwi over recent weeks, however the announcement provides markets with a reminder of the innate strength of the New Zealand dollar as a carry trade should the market turn back into positive territory in the coming period.
"However, despite the decision not to use traditional methods of monetary loosening as a means to bring about currency devaluation, statements from the central bank indicate that the currency is being actively sold as a means to bring it in line with the desired levels.
"The decision to declare the underlying activities of the RBNZ within the context of currency devaluation feeds into the market expectations owing to the increased anticipation of continued devaluation."