Week in FX Asia – The Kiwis Gave Us “The Hobbit” And Now An Expensive “Dollar”

On Wednesday, the RBNZ chose to leave the OCR unchanged at +2.5%. The Governor is bullish about New Zealand’s economy, saying “economic indicators are improving here and with many of our trading partners” and “positive global sentiment is resulting in lower bank funding costs and reduction of credit costs for both households and firms alike.”

The Governor “does not want to see financial stability of inflation risks accentuated by housing demand getting too far ahead of supply.” The central banks’ own analysis suggests that GDP growth is recovering, as business confidence and construction activity has picked up, while inflation is subdued due to “overvalued New Zealand dollar.”

In other words, policy makers do not want to adopt “loose monetary policy for fear of inflation”. Despite the weak labor market, the Kiwi’s economy is strengthening even without policy makers doing anything.

Such language is giving market participants the confidence to own more of the currency.

Aussie and Kiwi Remain Steady Before China Manufacturing
Australian Dollar Forecast Relies on Gas
NZ Dollar Near 3 Month High Versus Australian Dollar
China’s Used Car Market Outpaces New Sales Growth
Kiwi Dollar Eases Back to 0.8370 Before NZ Reserve Bank Meets Tomorrow
Singapore Office Rents to Rebound as Supply Growth Abates
Asian Shares Rise Tuesday, however Investors are Cautious before US Data
Yen given free reign to weaken? G20 unlikely to admonish Japan over “Competitive Devaluation”
S.Korea Shows Signs of Improving Domestic Demand
South Korean 2013 revised growth estimate from 3.9% to 3%
Chinese Central Bank says Yuan “Close to Equilibirum”

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