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New Zealand Dollar Rises, Central Bank Keeps Cash Rate Unchanged

David Meyer

US Dollar Fell after FOMC: Pound and New Zealand Dollar Rose

New Zealand dollar rose 0.72%

The New Zealand dollar to US dollar currency pair, which is directly the New Zealand dollar, was on a positive trajectory on January 28, 2016. It rose by 0.72% that day. The rise in the currency pair was primarily attributed to the monetary policy release by the Central Banks in both New Zealand and the United States. The currency pair ended the day at 0.65.

Reserve Bank of New Zealand signals dovish view after keeping cash rate unchanged

The Reserve Bank of New Zealand governor Graeme Wheeler has published the monetary policy statement in which the official cash rate was unchanged at 2.5%. This was after the reduction of 25 basis points in the previous monetary policy review. Wheeler gave a slightly dovish statement after the release, as he was wary of the inflation failing to reach the target levels.

Wheeler also suggested that the monetary policy would have to remain loose. He indicated future interest rate cuts to ensure that inflation is in line with targeted levels. Later in the day, Statistics New Zealand published the trade balance figure for December 2015 at a deficit of 53 million against the forecasts of a deficit of 130 million.

Impact on the market

The iShares MSCI Pacific Ex-Japan ETF (EPP) rose by 1.4% on January 28, 2016. The iShares MSCI Australia ETF (EWA) is another major ETF in the Oceania segment. It rose by a significant 1.8%. Tracking the upward movement in the New Zealand dollar, the iShares MSCI New Zealand Capped ETF (ENZL) rose by 1.2% after the monetary policy.

Among the major developed Asian ADRs (American depositary receipts), Canon (CAJ) rose by 0.36%, while Kyocera (KYO) fell by 0.43% on January 28, 2016. Nomura Holdings (NMR) rose by 0.2%.

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