The New Zealand dollar rebounded from its ten-week low against the greenback on Thursday after the country’s business confidence rose close to a 15-year high. However, the gains remained lower after the central bank data revealed its loan restrictions to curb the intense housing sector been working, without the interest rates hikes.
The New Zealand dollar rose 0.25% higher to $0.8167 as of the time writing, after it dropped to a low $0.8113 in the previous session.
The ANZ Bank Business Outlook advanced to 60.5 in November, rising to its highest since 1994, up from the 53.2 reading seen in October.
The short-term technical picture remains at low, as the kiwi hovered close to a three-week low. The Reserve Bank of New Zealand (RBNZ) revealed its loan restrictions on low equity mortgages worked.
The low-deposit lending saw a huge drop in October, as just 11.7% of new home lending was written on a deposit of 20% or less, down from 25.5% seen in September.
“RBNZ’s foreign exchange transactions data showed that the Bank bought a net NZD 7 million, contrary to some speculation of a step-up in net NZD selling,” RBC Capital Markets analysts noted in a market commentary on Thursday.
RBNZ Trail
“The reduction in high-LVR lending will help to reduce the risks of sharp correction in house prices in an already overvalued housing market,” RBNZ Deputy Governor Grant Spencer stated in the statement on Thursday. ”Such a correction could be damaging for the financial sector and broader economy,” he added.
The central bank has been dealing with the inflation in the housing sector. Governor Graeme Wheeler introduced restrictions on leveraged lending to control the inflating housing bubble. The experiment was introduced to steadily deflate the inflation in the housing sector without harming the rest of the economy.
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