New Zealand Dollar Forecast To Weaken As RBNZ Announces Currency Market Intervention

Modified: Wednesday, 8 May 2013 13:22 BST - Written by Tim Boyer

STORY LINK New Zealand Dollar Forecast To Weaken As RBNZ Announces Currency Market Intervention

The New Zealand Dollar has been the major mover on the day in the global currency markets, losing 0.86% of its value against the Pound. The shift out of Kiwi-denominated assets has been triggered by the dramatic news that the Reserve Bank of New Zealand has intervened in the foreign currency markets in order to actively weaken the New Zealand Dollar. The revelation that the RBNZ had followed the recent lead set by the Swiss National Bank and the Bank of Japan caused investors to swiftly adjust their positions in order to water down their exposure to the Kiwi Dollar.

The development sent the Pound to New Zealand Dollar exchange rate (currency : GBP/NZD) briefly back above the 1.8500 level earlier today, and the outlook for the New Zealand tender is now considerably less positive than it was in the second week of last month when the pair tumbled down to a new record low at 1.7707.

The forward lurch for GBP NZD would surely have been of a greater magnitude were it not for last night’s Chinese Trade Balance data which showed that imports into the world’s second most-active economy increased by an annualised 16.8% last month. The figure significantly bettered analysts’ expectations of a showing of 13.0%. Ordinarily, such a number would strongly favour the Kiwi because China remains New Zealand’s number one export market. However, today was a far from ordinary day for the NZD.

The positive news from China has elicited support for the Australian Dollar, which has managed to recoup a fair portion of the losses which it incurred against Sterling following Tuesday morning’s shock interest rate cut by the Reserve Bank of Australia. The Chinese print has helped to send the Pound to Australian Dollar exchange rate (currency : GBP AUD) down to as low as 1.5172 earlier. The Aussie is afforded further scope for improvement tonight when April’s domestic unemployment data is released. A drop in the total level of domestic joblessness from March’s 5.6% showing would send GBP AUD back down towards 1.5000.

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TAGS: Australian Dollar Forecasts Currency Predictions New Zeala Forecasts