Despite falling against most major currencies during yesterday’s trading, Sterling did manage to make some minor gains against the New Zealand Dollar, following the RBNZ’s decision on Wednesday evening to cut their base rate to a record low of 2%, although many analysts had anticipated a cut to 1.75%, which may be the reason that the Pound has not strengthened more against the Kiwi.
Graeme Wheeler, Governor of the RBNZ, held a press conference after the decision to give an insight in to the decision. He stated that the main reason for the cut was a result of the NZD being too expensive which has been having an impact on exports, whilst keeping inflation well below target.
Those looking to sell NZD to buy Sterling may be wise to move sooner rather than later to benefit from rates where they are now as we are currently witnessing some of the best opportunities to sell Kiwi’s in the past 10 years. Wheeler did also hint towards future rate cuts to help boost inflation further, so I believe we could be entering a period of volatility for the NZD.
Last night the New Zealand economy showed signs of underlying strength however, with retail sales figures for Q2 of this year rising at their fastest pace in almost 10 years. The rise has been mainly attributed to an increase in spending on furnishing homes, new motor vehicle sales and the food and beverage sector. These figures suggest that it may not be long before we see inflation figures starting to improve, with consumer spending seemingly moving along nicely. This may mean that further interest rate cuts may not be needed going forward, on the contrary to Wheeler’s claims. So, if you have an upcoming NZD transfer, it may be prudent to register with one of our experienced brokers, who can keep you abreast of all the latest market movement.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.
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