Investing.com – The New Zealand rose against its U.S. rival in Wednesday’s Asian session after the Reserve Bank of New Zealand left the country’s benchmark interest rate unchanged at 2.5%.
In Asian trading Wednesday, NZD/USD rose 0.30% to 0.8425. The pair was likely to find support at 0.8352, the low of April 1 and resistance at 0.8462, Monday's high.
The kiwi gained strength against the greenback after RBNZ opted to keep interest rates at 2.5%, though that was widely expected by traders. RBNZ Governor Graeme Wheeler said that New Zealand’s rate of inflation is set to linger near the bottom of the central bank’s 1% to 3% range this year.
In his remarks, Wheeler stopped short of talking the kiwi, though he did say last month that the currency is overvalued. In March, Wheeler said the kiwi’s steady rise could force an interest rate, though RBNZ has previously indicated it will leave rates unchanged this year with an eye toward a rate increase early next year.
Last week, an official from the International Monetary Fund also called the New Zealand dollar overvalued. The official made similar remarks about the Australian dollar.
Still, traders may have been hoping for a more dovish tone from RBNZ due to increasing speculation about a housing bubble in New Zealand. RBNZ officials have previously said the central bank could achieve its desired inflation targets faster by cutting rates, but that action risks fanning the flames of an already hot real estate market.
Meanwhile, NZD/JPY popped 0.59% to 84.04. EUR/NZD dropped 0.52% to 1.5406 while AUD/NZD fell 0.51% to 1.2156.
In Asian trading Wednesday, NZD/USD rose 0.30% to 0.8425. The pair was likely to find support at 0.8352, the low of April 1 and resistance at 0.8462, Monday's high.
The kiwi gained strength against the greenback after RBNZ opted to keep interest rates at 2.5%, though that was widely expected by traders. RBNZ Governor Graeme Wheeler said that New Zealand’s rate of inflation is set to linger near the bottom of the central bank’s 1% to 3% range this year.
In his remarks, Wheeler stopped short of talking the kiwi, though he did say last month that the currency is overvalued. In March, Wheeler said the kiwi’s steady rise could force an interest rate, though RBNZ has previously indicated it will leave rates unchanged this year with an eye toward a rate increase early next year.
Last week, an official from the International Monetary Fund also called the New Zealand dollar overvalued. The official made similar remarks about the Australian dollar.
Still, traders may have been hoping for a more dovish tone from RBNZ due to increasing speculation about a housing bubble in New Zealand. RBNZ officials have previously said the central bank could achieve its desired inflation targets faster by cutting rates, but that action risks fanning the flames of an already hot real estate market.
Meanwhile, NZD/JPY popped 0.59% to 84.04. EUR/NZD dropped 0.52% to 1.5406 while AUD/NZD fell 0.51% to 1.2156.