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Forex Flash: Reinsurance flows in NZ are huge, Kiwi supportive for another 12 months - Westpac

By FXstreet.com,  October 25, 2012, 07:07:00 PM EDT

FXstreet.com (Barcelona) - The Kiwi has recently been agitated by a speech from the new RBNZ Governor Wheeler. Headlines that the RBNZ has room to reduce rates if needed caused part of the fall, with Apple miss applying further pressure.

According to Westpac FX Strategist Sean Callow, "the speech overall however wasn't about near term policy, more of a big picture view of monetary policy in a world of ultra low interest rates. Wheeler largely dismissed the idea of cutting interest rates to try to weaken NZD and discussed the limitations of intervention, while saying it remained an option."

Mr. Callow adds: "He highlighted the difficulty of conducting monetary policy when earthquake reconstruction is around 12% of GDP "and insurance payouts in excess of this". The latter point is one we have made repeatedly - reinsurance flows are huge and only some of the NZD has been bought already, a source of support for the kiwi that will remain probably for another 12 months."




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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