WELLINGTON: The New Zealand dollar declined against the Australian dollar ahead of the Reserve Bank of Australia’s decision on interest rates.
THE kiwi touched 90.82 Australian cents overnight, and was trading at 90.23 cents at 8am in Wellington, from 90.26 cents at 5pm on Monday. The local currency slipped to 65.70 US cents from 65.89 cents and the trade-weighted index was at 70.30 from 70.31.
Australia’s Reserve Bank is likely to keep interest rates on hold on Tuesday, according to 25 out of 28 economists in a Bloomberg poll. While RBA governor Glenn Stevens is expected to keep the rate at 2 per cent, traders will be closely watching the tone of his statement for signs of potential weakness ahead.
“The market consensus is strongly in favour of steady rates from the RBA though the small minority that is forecasting a 25 basis point rate cut hints at the importance of this week’s policy meeting as a gauge to the likelihood of further easing from the RBA,” said Rabobank’s Jane Foley.
“This week’s RBA decision comes against the backdrop of intense concerns about Chinese growth projections and increased volatility in iron ore and coal prices,” she said. “A glut of supply combined with concerns about Chinese growth has combined to recently take prices of both commodities to 10-year lows.”
Currencies of commodity-exporting nations including Australia, New Zealand and Canada have been under pressure amid signs of a slowdown in China, the world’s biggest consumer of raw materials.
