The New Zealand dollar jumped today as the central bank signaled that it is going to tighten its monetary policy even though this is not going to happen this year.
The Reserve Bank of New Zealand kept its main interest rate today. Reserve Bank Governor Graeme Wheeler said that the currency remains excessively strong:
Despite having fallen on a trade-weighted basis since May 2013, the New Zealand dollar remains high and continues to be a headwind for the tradables sector, restricting export earnings and encouraging demand for imports.
He also mentioned possibility of interest rate hikes in the future:
Although removal of monetary stimulus will likely be needed in the future, we expect to keep the OCR unchanged through the end of the year.
NZD/USD soared from 0.7925 to 0.8046 (the highest settlement since June 14) and NZD/JPY jumped from 79.45 to 80.26 (the strongest since June 5) as of 14:48 GMT today.
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