New Zealand’s dollar surged, headed for its
biggest daily gain in four months, after the central bank raised interest rates
and flagged further increases. The two-year swap rate climbed 11 basis points,
or 0.11% point, to 4.13%, the highest since July 2010. New Zealand’s central
bank boosted its official cash rate by a quarter-percentage point to 3.25
percent, the third increase this year, and signaled more tightening to come. The
RBNZ left its forecast for the 90-day bank bill rate broadly unchanged;
suggesting borrowing costs may rise twice more this year.
RBNZ Assistant
Governor John McDermott said currency traders are mispricing the nation’s
dollar and should be taking more notice of falling commodity prices. The kiwi
rallied at least 1 percent versus all of 31 major counterparts as Reserve
Bank of New Zealand Governor Graeme Wheeler said it was important to
contain inflation expectations. And it appreciated 5.8 percent this year. New
Zealand’s currency jumped 1.4 percent to 86.70 U.S. cents, headed for its
biggest gain on a closing basis since Feb. 4. The kiwi appreciated to as much
as 86.85, the highest level since May 15.
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