The past week was very friendly to the New Zealand dollar as the nation’s central bank performed the long-awaited interest rate hike, making it clear that the New Zealand economy experiences strong growth and increasing the attractiveness of the currency to investors, particularly to carry traders who profit from difference of interest rates in various countries.
The New Zealand currency started the week on a strong footing despite some negative fundamentals as traders were hoping that the Reserve Bank of New Zealand would increase borrowing costs. The RBNZ did not disappoint, raising its main rate. The kiwi rallied afterward even though the central bank voiced concern about the strength of the currency and said that it should weaken.
The New Zealand dollar rallied against most major currencies, including the Canadian and Australian dollars. The Aussie had rallied on the surprisingly good employment data, but retreated by the weekend.
The kiwi was not able to outperform the Japanese yen, proving the bearish forecast for the yen to be wrong.
NZD/USD gained from 0.8448 to 0.8530, reaching the high of 0.8604 during this week. AUD/NZD declined from 1.0680 to 1.05753. At the same time. NZD/JPY was down from 87.03 to 86.40, retreating from the weekly maximum of 88.30.
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