New Zealand Dollar Higher Late as Investors Position Ahead of RBNZ

 
   By Rebecca Howard 
 

        WELLINGTON, New Zealand--The New Zealand dollar is slightly higher late Monday as investors position themselves ahead of the central bank's rate decision Thursday.
        The Kiwi was at US$0.6570 in late Wellington trading, compared with US$0.6534 late Friday. The New Zealand dollar was at A$0.8925 versus A$0.8819 previously.
        According to the median from a poll of 16 economists by The Wall Street Journal, the RBNZ is expected to cut the cash rate by 25 bps to 3.0% when it meets next week with further cuts expected over the remainder of 2015. There is some speculation, however, that the central bank might cut by 50 bps.
        Westpac Bank said Monday the challenges facing the New Zealand economy have continued to mount, prompting it to now expect the central bank to cut the cash rate to a record low of 2.0% by the end of the year. "This will involve one reduction of 50bps - most likely in September, but possibly as early as this week's July cash rate review," it said.
        BNZ Bank, however, said a 50 bps rate cut is unjustified.
        "Cutting 50 points would, for instance, give a sense that the bank is way behind the curve, and suddenly seeing a decidedly negative economy. For all the risks out there, we don't believe it's got to that point," it said.
        The Kiwi also got a lift late Monday when Prime Minister John Key said the recent fall in the New Zealand dollar was faster than expected and is helping support the economy, as are lower interest rates. The prime minister also said the economy is "still growing at a respectable rate" despite recent challenges including plummeting dairy prices.
        The government is mindful of global risks but its important not to overstate them, said Mr. Key. "The economy is more resilient than it was six or seven years ago."
        Write to Rebecca Howard at rebecca.howard@wsj.com; @FarroHoward
        (END) Dow Jones Newswires

        July 20, 2015 01:47 ET (05:47 GMT)

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