The Reserve Bank of New Zealand Governor, Alan Bollard, said yesterday that he won’t be reducing the country’s key interest rate from its record high value in 2008, because the national inflation still remains the major concern.
Both Australian and New Zealand dollar continued to rise today after the yesterday’s fast growth as the investors remained confident in the stock markets’ improvement and in the carry trade.
According to Australia’s largest mortgage provider, Commonwealth Bank of Australia, the U.S. dollar will perform worse than experts previously expected for this year.
The New Zealand and Australian currencies continued their bearish trends against the Japanese yen today and dropped on Forex market during the Asian trading session, as the Japanese stock market plunged.
New Zealand dollar reached the two months high level against the Japanese yen and almost broke the more than 6 months record high level against the U.S. dollar today. Aussie also showed a similar dynamic of growth — it came close to the 2 months old records against yen and reached its highest value against the U.S. dollar since November 2007.
Today both the Australian and New Zealand dollars continued their daily growth against their counterpart from the United States on willingness of the Forex traders to earn from the interest rates difference.
New Zealand dollar is showing a high level breaking growth today against the U.S. dollar after the confidence in the carry trade and other high-risk investments rose on the Fed’s rate cut expectations.
Both Australian and the New Zealand dollars gained today on a presumption that the international investors bought Australia’s and New Zealand’s government bonds as their premiums yield more than their U.S. and Japanese counterparts.
New Zealand dollar rose against all other major currencies after the Reserve Bank of New Zealand left the Official Cash Rate (OCR) - short-term lending interest rate - unchanged at 8.25%. And as it was hinted by Bank Governor Alan Bollard the rate is not likely to be lowered until 2009.
While the Japanese yen is surely a benefiting currency when it comes to the carry trade panic, some currencies feel extremely bearish at the times of global financial instability and other factors that bring down risk appetites. New Zealand dollar is one such currency.