(Jun 9 Thursday) The Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.25 percent which came as a surprise to a few analysts who were expecting the RBNZ to ease the OCR rate by at least 25 basis points. The New Zealand dollar surged and rose 90 pips immediately from 0.7020 to 0.7110 on the initial reaction to the central bank's announcement. (21:00 GMT)
The RBNZ accompanying statement relative to FX were: "The exchange rate is higher than appropriate given New Zealand's low export commodity prices. Together with weak overseas inflation, this is holding down tradeables inflation. A lower New Zealand dollar would raise tradeables inflation and assist the tradeables sector and we expect inflation to strengthen reflecting the accommodative stance of monetary policy, increases in fuel and other commodity prices, and expected deprecation in the New Zealand dollar and some increase in capacity pressures. Further policy easing may be required to ensure that future average inflation settles near the middle of the target range."