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NZD New Zealand Dollar strengthened
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Thursday, 05 March 2009 |
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The New Zealand Dollar strengthened against the Pound early last week, but was unable to maintain these gains as Sterling rallied on Friday afternoon.
The January trade deficit in New Zealand narrowed to its lowest level in eight years, emphasizing central bank Governor Bollard's recent comments that the weakening NZD is helping exporters to become more competitive. Bollard’s statement suggests that the RBNZ are willing to allow the NZD to remain relatively weak, at least while it continues to benefit those businesses whose products attract buyers from overseas.
Despite the increasing demand for products made within New Zealand, the National Bank Business outlook survey remained downbeat - with a 6% increase in the proportion of businesses expecting worse conditions over the next year.
The contrasting information makes it incredibly difficult to forecast the outcome of the next interest rate decision from the RBNZ, which will take place on 12th March. With the rate currently at 3.50%, relatively high considering global interest rates at the moment, most analysts expect that there will be a further cut.
With very little data out from New Zealand this week the direction of the cross is likely to be determined by sentiment from the UK, particular focus will be on this Thursday’s interest rate decision from the BOE and statements from Mervyn King (Governor of the Bank of England).
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