Although the ‘Kiwi’ lost ground against its American rival on drought concerns, speculation regarding BOJ policy helped it bound to an over four year high on the Japanese Yen.
The New Zealand Dollar exchange rate was trading in the region of 0.5528 against the British Pound as of 09:36 am
Mounting fears that national drought will prove damaging to the New Zealand economy – which has so far exhibited good signs of recovery – caused the ‘Kiwi’ to decline against the US Dollar and several of its other most traded peers during local trade.
Last week drought declarations were extended to cover the majority of New Zealand’s North Island, including the South Pacific nation’s main milk-producing region – a major economic concern.
More recently Finance Minister Bill English asserted to Parliament that the arid conditions produced by the drought could have a negative effect on economic growth. His comments helped the ‘Aussie’ gain on the ‘Kiwi’ by 0.4 per cent during local trade, and industry experts are predicting that the AUD/NZD pairing could continue to rise.
David Croy, head of markets research, was quoted as saying: ‘Australian data this week is likely to exhibit strength. In New Zealand the risks look poised to the downside as the market focuses on the developing drought.’
However, the New Zealand Dollar did experience significant upward momentum in one pairing, achieving an over four-year high on a broadly softening Japanese Yen.
The ‘Kiwi’ hit 79.90 Yen, the highest since July 2008, after the nominee for BOJ governor asserted that he was ready to rapidly expand monetary stimulus.
Haruhiko Kuroda, an advocate of stimulus, implied that policy could be eased before the BOJ meets on April 4th, causing the Yen to record widespread declines.
‘Kiwi’ fluctuations could occur tomorrow following the release of the Reserve Bank of New Zealand’s rate decision.
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