NZ dollar falls to 3-week low against pound as Carney sees less need for stimulus
By Jonathan Underhill
June 29 (BusinessDesk) - The New Zealand dollar fell to a three-week low against the pound after Bank of England
governor Mark Carney signalled it may be necessary to remove some of the bank's monetary stimulus, suggesting interest
rates could be raised as British economic growth picks up.
The kiwi dropped to 56.50 British pence as at 8am in Wellington, and earlier touched 56.16 pence, from 56.77 pence late
yesterday. It traded at 73.09 US cents, up from 72.76 cents yesterday.
Carney told a European Central Bank conference in Portugal that "some removal of monetary stimulus is likely to become
necessary" with a return to more conventional policy decisions. The comments come after the BoE's policy committee was
split this month on whether to begin raising interest rates from a record-low 0.25 percent, with those voting to stay
put pipping the rate hikers by five to three. The kiwi recovered some ground against the euro after the ECB indicated
president Mario Draghi hadn't intended to send any hawkish signals to the market in his comments in Portugal.
"Markets are sensing a coordinated effort by central bank heads to give the message that global monetary policy is close
to an inflexion point and economies can handle some removal of monetary accommodation," said Jason Wong, currency
strategist at Bank of New Zealand, in a note. "The market isn’t confident that a (UK) hike will come as soon as the next
meeting in August, but OIS pricing moved to a better than even chance of a hike by
November."
The kiwi rose to 64.19 euro cents from 64.11 cents late yesterday, having earlier tumbled against the regional bloc's
currency after Draghi hinted the ECB might start winding down its stimulus.
On the domestic front, investors will be watching for ANZ Bank New Zealand's business outlook survey today and building
consents data tomorrow.
The trade-weighted index rose to 78.38 from 78.21. The local currency slipped to 95.58 Australian cents from 95.72 cents
late yesterday and rose to 82.06 yen from 81.59 yen. The kiwi gained to 4.9672 yuan from 4.9487 yuan.
(BusinessDesk)
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