The Pound to New Zealand Dollar exchange rate weakened on Tuesday as the release of positive domestic data out of New Zealand buoyed the South Pacific currency, and expectations that the New Zealand Central Bank will hike interest rates also supported.
A report released by the New Zealand Institute of Economic Research showed that business confidence in the country remained positive in the first quarter of the year with 52% of businesses saying that they have a positive outlook.
“The underlying trend in the economy is very, very strong. Not only is the recovery strengthening but it is broadening also and we are finally starting to see persistent optimism,” said the principal economist at NZIER.
Also supporting the ‘Kiwi’ is the speculation that the New Zealand Reserve Bank will raise interest rates at its policy meeting due to be held on April 24th. Traders raised their bets and are pricing in a 96% chance of a rate hike.
“We’re going to get another rate hike in the next two-weeks which is still attracting investors. The Kiwi’s still got a bias to the topside,” said the head of institutional FX sales at ASB Institutional in Auckland.
The ‘Kiwi’ also advanced against the Australian Dollar after a business confidence survey released in the larger South Pacific nation softened. The National Australia Bank business survey showed weaker sentiment amongst firms.
The currency also made gains against the US Dollar and Euro.
An improvement in sentiment towards perceived riskier assets is also supporting demand for the New Zealand Dollar.
Tomorrow sees the publication of the latest Business Markit PMI report which is forecast to come in positively.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8655 ,
New Zealand Dollar,, Pound Sterling,0.5199 ,
New Zealand Dollar,,Euro,0.6292 ,
New Zealand Dollar,,Australian Dollar,0.9288 ,
[/table]
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