Investing.com - The New Zealand dollar is overvalued and the rate will be a factor in the extent and speed of future hikes in the official cash rate, Governor Graeme Wheeler said Wednesday.
"In such circumstances, the high exchange rate, along with new economic data, will be a factor in our assessment of the extent and speed with which the Official Cash Rate (OCR) needs to be raised," he said in a prepared speech.
"Many analysts consider that the positive news on the economy and the forecast tightening in interest rates are fully priced in and believe that there is considerable downside risk for the currency."
The exchange rate could be expected to weaken if the U.S. economy continues to improve; global dairy prices continue to come off their recent highs or China's growth slows, Wheeler said.