WELLINGTON: The New Zealand dollar fell to a three-week low against its Australian counterpart after a government leadership change boosted optimism for economic growth across the Tasman, while speculation dimmed that the Reserve Bank of Australia will cut interest rates, unlike the Reserve Bank of New Zealand.
The kiwi dollar traded at 88.46 Australian cents at 5pm in Wellington, having earlier touched 88.30 cents, the lowest since Aug. 24, down from 89.08 cents yesterday.The kiwi was little changed at 63.10 US cents, giving up earlier gains, from 63.12 cents yesterday.
The Australian dollar initially got a boost from the news that Tony Abbott had been ousted as prime minister by rival Malcolm Turnbull, who is promising to rebuild economic confidence. But the kiwi has broken below its trading range of the past few months on expectation the RBA won’t rush to cut its cash rate again from 2 percent, while the RBNZ has signalled it has at least one more quarter-point cut up its sleeve after cutting the official cash rate to 2.75 percent last week.
“The RBA is priced to ease, to cut rates – we don’t think they will,” said Imre Speizer, a strategist at Westpac Banking Corp. “The data out of Australia is ok and there was nothing in the RBA minutes today to suggest they’re going to ease in the next few months. By contrast, the RBNZ is cutting rates.”
