New Zealand’s dollar gained after the central bank raised its benchmark rate for a second month and increased its growth estimate for the year ended March.
The kiwi rose versus all 16 major peers after Reserve Bank of New Zealand Governor Graeme Wheeler said prices for the nation’s export commodities remain “very high” while acknowledging recent declines for dairy. The strong currency is helping to contain inflation though current levels may not be sustainable, he said.
“The RBNZ showed absolutely no signs of waning in their determination to increase the benchmark rate and we saw the statement as being broadly hawkish,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. in Auckland. “That determination will continue to support the New Zealand dollar via the yield channel.”
The kiwi rose 0.3 percent to 86.12 U.S. cents as of 8:17 a.m. in Sydney. It advanced 0.3 percent to 88.27 yen.
Gross domestic product is estimated to have grown 3.5 percent in the year to March, Wheeler said in the statement accompanying his decision to raise the benchmark rate to 3 percent from 2.75 percent. In last month statement, that estimate was 3.3 percent.