NZ Dollar Rises on Speculations About Increasing Rates

The New Zealand dollar rose today after two days of decline against its U.S. counterpart, the euro and the Japanese yen as the Asian stocks gained and the commodity prices increased, boosting the demand for the higher-yielding assets.

The New Zealand currency also strengthened on the speculation that the Reserve Bank of New Zealand will raise its record low interest rates on June 10. The central bank expected to raise the official cash rate from a record low 2.50 percent to 2.75 percent. The statement of the U.S. Federal Reserve Chairman Ben Bernanke that the U.S. economy recovers with the moderate pace eased the uncertainty on the global markets and added to the kiwi’s strength.

The economists say that the inflation and activity outlooks suggest that the central bank should raise the interest rates. Yet the sovereign-debt crisis in Europe may decrease the demand for the exports, making the increase of the rates less certain.

NZD/USD rose to about 0.6675 as of 19:49 GMT today after opening at 0.6588. EUR/NZD traded near 1.7893 after it opened at 1.8083. NZD/JPY rose to 60.95.

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