NZD flying high after RBNZ - Rabobank

Michael Every, Head of Financial Markets Research at Rabobank, notes that in New Zealand the RBNZ left rates unchanged as expected and as a result the NZD saw a dramatic surge up to 0.7125, the highest since June 2014.

Key Quotes

“True, the Reserve Bank talked about introducing more measures to cool the ‘nutty’ property market, such as tweaking LTV ratios further, with the implication being that might then allow a freer hand on the rates front; however, this seemed to have as much impact on the market as LTV ratios will have on the flood of offshore money/straight cash buyers flowing into New Zealand housing.

At least the age-old rivalry between the Kiwis and the Aussies can rumble onto a new front: which central bank ‘gets’ the new global normal the least. For now I still think the RBNZ have it with their double-attempt to raise rates, but the race is not over yet, as the RBA showed this week.”