Forex - NZD/USD lower after Wheeler comments

A A A - " The New Zealand dollar traded lower against its U.S. rival during Thursday's Asian session from Reserve Bank of New Zealand Governor Graeme Wheeler.

In Asian trading Thursday, NZD/USD fell 0.19% to 0.8253. The pair subsequently consolidated at 0.8269, edging up 0.18%.

Earlier Wednesday, RBNZ opted to keep rates at a record low of 2.5%. However, that may not have been the biggest news pertaining to kiwi.

"Sustained strength in the exchange rate that leads to lower inflationary pressure would provide the bank with greater flexibility as to the timing and magnitude of future increases in the OCR," said Wheeler in a statement released earlier in the session.

Traders interpreted those remarks to mean that a rate hike from RBNZ is further off than previously expected. For much of this year, it was believed the central bank would become one of the first in the developed world to raise rates, but even that was not expected to happen until the first or second quarter of 2014.

RBNZ has resisted quantitative easing and rate cuts unlike many of its developed world counterparts.

"The extent and timing of the rise in the policy rate will depend largely on the degree to which momentum in the housing market and construction sector spills over into broader demand and inflation pressures," according to Wheeler's statement.

Of rising property values, Wheeler said, "Recently introduced restrictions on high loan-to-value mortgage lending are expected to help slow house price inflation and the bank will continue to monitor the situation closely."

On Wednesday it was revealed Moody's Investors Service recently considered stripping New Zealand of its AAA sovereign debt rating due in part to the country's widening account deficit. Moody's is the only one of the three major ratings agencies to have an AAA rating on New Zealand.

Elsewhere, NZD/JPY fell 0.19% to 81.27 while AUD/NZD rose 0.28% to 1.1507. offers an extensive set of professional tools for the financial markets.
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