By TraderVox.com
Talking to a parliamentary select committee on finance, Graeme indicated that there are no factors that will cause the kiwi to depreciate. He dismissed calls to cut interest rates saying that cutting interest rates will not sustainably lower local dollar.
Kiwi, which has gained 5 percent this year, has been performing remarkably well than other currencies as investors seek currencies from growing economies. The risk-on mood in the market has prevailed for most of the year, pushing commodity related currencies down. New Zealand’s economy grew by 2.6 percent in the year ending June 30. The central bank has predicted increased growth this year.
The Financial Stability Report released yesterday indicated the possibility of further kiwi strengthening. The report went ahead to note that this will be the case under the backdrop of improved economic forecast. The RBNZ held its key interest rate at 2.5 percent in their decision made on October 25. The central bank also noted that the strong kiwi was undermining trade.
Wheeler told a Finance Parliamentary Committee that there is no clear solution that would lead cutting interest rates to lowering the strength of the kiwi. The new governor said resulting to asset-purchases or quantitative easing were signs of desperation.
The central bank indicated in the report that the economy is growing at a modest pace and the private sector credit is rising after remaining stagnant in past few years. The housing sector is being monitored by the RBNZ as it tries to establish the housing market strength.
According to a report from Quatable Value, the house prices in New Zealand grew at the fastest annual rate of 5.3 percent since May 2010.
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