PERTH: The New Zealand fell against its Australian counterpart after stronger-than-expected economic growth across the Tasman reinforced speculation the Reserve Bank of Australia won’t cut interest rates any further.
The kiwi fell to 91.98 Australian cents at 5pm in Wellington from 92.27 cents immediately before the release, and 92.65 cents yesterday. The local currency was little changed at 71.69 US cents from 71.73 cents at 8am and up from 71.13 cents yesterday.
The Australian dollar rallied after Bureau of Statistics data showed the nation’s economy expanded a seasonally adjusted 0.9 percent in the first quarter, more than the 0.7 percent growth analysts were expecting. That came after the RBA yesterday kept the cash rate at a record low 2 percent, saying it would assess economic and fiscal data over the coming year to see whether the current stimulatory policy would stoke growth and inflation to meet the bank’s targets.
“If you look at the interest rate outlook, it’s still not 100 percent certain in both countries (New Zealand and Australia). You can’t blame the market for second-guessing itself on which way the RBA and RBNZ (Reserve Bank of New Zealand) will move,” said Alex Hill, head of corporate foreign exchange at NZForex in Auckland. “Kiwi/Aussie is reconfiguring itself, as it should do. Those levels up at 99 (NZ cents to $A1) were just never going to last.”
