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20 Feb 2013
RBNZ Wheeler speech a wake-up call for Kiwi bulls - RBS
After today's RBNZ Governor Wheeler speech giving his views on the Kiwi, calling it "over-valued" and adding that the central bank is ready to intervene if necessary, the NZD has suffered more than 1/2 cent drop vs the USD.
According to Greg Gibbs, currency strategist at RBS, "the speech confirms the RBNZ is much more focused on preventing a rise in the NZD and is going to employ policy tools to attempt to weaken the NZD or at least lean harder against its rise."
The most important message today, Greg notes, "is that the RBNZ is readying to introduce macro-prudential controls to control credit growth in the housing market."
"This means they are much less likely to hike rates while the NZD remains "over-valued". So the market should now start to unwind that 30bp of hikes it has recently priced into the rates curve" Mr. Gibbs adds.
The second important message today is that "the RBNZ is planning to use intervention to sell the NZD" he concludes.
According to Greg Gibbs, currency strategist at RBS, "the speech confirms the RBNZ is much more focused on preventing a rise in the NZD and is going to employ policy tools to attempt to weaken the NZD or at least lean harder against its rise."
The most important message today, Greg notes, "is that the RBNZ is readying to introduce macro-prudential controls to control credit growth in the housing market."
"This means they are much less likely to hike rates while the NZD remains "over-valued". So the market should now start to unwind that 30bp of hikes it has recently priced into the rates curve" Mr. Gibbs adds.
The second important message today is that "the RBNZ is planning to use intervention to sell the NZD" he concludes.