Inflation data pushes up kiwi dollar

The New Zealand dollar has gained after an unexpected lift in inflation in the December quarter raised the chance of the Reserve Bank hiking interest rates as early as next week.


THE kiwi rose to 83.21 US cents at 5pm in Wellington from 82.61 cents at 8am and 82.43 cents on Monday. The trade-weighted index advanced to 79.09 from 78.37 on Monday.

The consumers price index increased 0.1 per cent in the December quarter against market expectations of a 0.1 per cent decline and the Reserve Bank’s forecast of a 0.2 per cent fall.

“We don’t think it’s a major for the Reserve Bank – it’s not stuff they’re looking at and we still think March” for a rate rise, said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland.

“The kiwi’s still in the middle of its recent range between 81.50 US cents and 84 cents.”

Wednesday’s Australian inflation figures may weigh on the trans-Tasman cross-rate, with the kiwi near eight-year highs because of the nations’ divergent interest rate paths.

Economists expect Australian consumers prices rose 0.5 per cent in the December quarter for an annual pace of 2.5 per cent, which may quell the need for another rate cut.

The kiwi rose to 94.40 Australian cents at 5pm in Wellington from 93.87 cents on Monday.

It also gained to 87.06 yen from 85.72 yen and to 61.42 euro cents from 60.93 cents.