The New Zealand dollar traded near 56 U.S. cents on Nov. 2 after the Reserve Bank of New Zealand (RBNZ) held its policy rate at 2.75%, while inflation remained above target and policymakers split over the next move.
The RBNZ’s Nov. 2 reference rate was US$0.56245 per New Zealand dollar, compared with US$0.56285 on Oct. 30. Reuters reported a 0.11% fall to US$0.5625 in Asian trading on Nov. 2, after a 1.2% decline over the previous week following the rate decision. EconoTimes previously covered the currency’s initial drop after the hold.
FXStreet said NZD/USD briefly climbed from just above US$0.5600 to just under US$0.5650, attributing the move to a weaker U.S. dollar and lower crude prices amid Iran-related diplomatic headlines. It later reported that the pair gave back the gain.
The RBNZ left its Official Cash Rate at 2.75% on Oct. 28 in a 4-3 vote. Three committee members favored a 25-basis-point increase to 3%. The four members who supported the hold said two recent rate increases gave the committee more time to assess their effects. The dissenters warned that persistent inflation could become entrenched in price-setting, with conflict-related freight and shipping costs adding to the risk.
Annual inflation eased to 3.7% in the September quarter from 4.1% in June, remaining above the RBNZ’s 1% to 3% target. The bank forecasts inflation will rise to 4.4% in the December quarter, largely reflecting fuel futures prices.
The RBNZ said export-exposed parts of the economy were benefiting from high commodity prices, demand for goods exports and increased tourist numbers. It also said weak household consumption and higher prices were weighing on households and businesses tied to domestic demand.
Statistics New Zealand (Stats NZ) will release September-quarter labor-market data Wednesday, Nov. 4. The RBNZ’s next scheduled Official Cash Rate update is Dec. 9.
