NZ Herald business editor at large

The Economy Hub: Where to next for the Kiwi dollar?

The kiwi dollar has been on the rise again this month. It flirted with US70c last week, its highest level in a year, after the US Federal Reserve spelled out a cautious path for US interest rate rises.

That has prompted local banks like ASB to revise currency forecasts upwards. ASB now has the kiwi at US67c by the end of June, where it previously had it at US63c.

READ MORE:
• The Economy Hub: Why is the dollar rising again?
The Economy Hub: The Reserve Bank's surprise OCR cut

On latest episode of The Economy Hub ASB chief economist Nick Tuffley says he is picking dollar will stay near these levels while we wait for the US Federal Reserve to raise interest rates.

The US dollar had stopped strengthening, he said.

"We're in a battle of relative interest rates and ours still look pretty high."

The kiwi was currently at the mercy of the US dollar story, said Alex Hill, head of corporate FX at NZForex.

The track for rate hikes had slowed in the US but it remained the only major economy that was looking to raise rates.

On that basis it was likely that the kiwi would continue to track downwards al be it at a slower rate.

Tuffley said ASB was taking a different view picking that the US rate hikes were priced in and the greenback had peaked so the kiwi dollar would gradually edge upwards.

The kiwi was up at 68.27 US cents at 5pm today, from 68.09 cents at 5pm yesterday.

- NZ Herald

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2016, NZME. Publishing Limited

Assembled by: (static) on production apcf05 at 03 Dec 2016 23:28:08 Processing Time: 261ms