NZ dollar declines after Fed hikes rates, keeps outlook unchanged
By Tina Morrison
Dec. 17 (BusinessDesk) - The New Zealand dollar fell after the Federal Reserve raised interest rates for the first time
in nearly a decade and kept its outlook for future hikes on track.
The kiwi was trading at 67.66 US cents at 8:30am in Wellington, from 67.79 cents immediately before the Fed's decision
was released at 8am, and from 67.65 cents at 5pm yesterday. It dropped as low as 67.10 US cents after the announcement.
The trade-weighted index was at 73.60 at 8:30am, from 73.69 at 8am, and 73.55 yesterday.
The Federal Reserve's policy-setting committee raised interest rates in the world's largest economy by a quarter
percentage point to between 0.25 percent and 0.5 percent in a unanimous decision, and highlighted that the rate hike was
a tentative beginning to a gradual tightening cycle. The Fed's economic projections were largely unchanged from its
September forecasts, with the so-called "dot plot" path for interest rates continuing to signal it planned to raise
rates four times next year to take the benchmark 1 percentage point higher.
"The US dollar is stronger across the board," said Tim Kelleher, ASB Bank head of institutional foreign exchange sales
New Zealand. "They have kept the dot plots as they were, the market was expecting maybe (Fed chair Janet Yellen) would
trim those a little bit so the fact they have kept them as is is probably reasonably positive. It indicates another four
rate hikes next year."
Traders are now awaiting further comments on the outlook from Yellen who is scheduled to speak at 8:30am New Zealand
time.
In New Zealand today, third-quarter gross domestic product data is published at 10:45am. Economists polled by Reuters
expect the economy expanded 0.8 percent in the quarter, for an annual rate of 2.3 percent.
The New Zealand dollar edged up to 93.85 Australian cents at 8:30am, from 93.78 cents yesterday, advanced to 45.08
British pence from 44.94 pence, slipped to 61.78 euro cents from 61.84 cents, gained to 82.43 yen from 82.35 yen, and
rose to 4.3792 yuan from 4.3717 yuan.
(BusinessDesk)