The New Zealand dollar fell initially today, together with other high-beta currencies, because of poor trade data released from China over the weekend. Most currencies recovered later and the kiwi was among them as speculations about an interest rate hike allowed it to overcome the negative impact of the news from China.
Rebuilding after the earthquake in Christchurch spurred construction boom that translated in rising prices. Inflation pressure has negative impact on household income of New Zealand citizens, giving incentive for policy makers to tighten monetary policy as a way to rein inflation.
Many economists believed that the Reserve Bank of New Zealand would raise interest rates as early as March. The RBNZ meets on Wednesday, March 12, and market participants will see if such predictions were correct. Most analysts think that the central bank will boost its main rate by 25 basis points to 2.75 percent.
NZD/USD rose from 0.8448 to 0.8455 and NZD/JPY advanced from 87.03 to 87.32 as of 15:44 GMT today.
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