November 23, 2021

NZD Ready To Bounce Back From RBNZ Policy Decision?

 The kiwi dollar continues to ride a winding road as investors expect the Central Bank of New Zealand (RBNZ) to raise its interest rates for the second time at a policy meeting to be held in the Asian session on Wednesday.

With broad expectations, the RBNZ is forecast to raise interest rates by at least 25 basis points to 0.75% from current levels.

However, there are also some analysts who see the central bank will act more aggressively by raising rates by 50 basis points.

Although the Covid-19 case is still seen high in the country, but with strong inflation readings, good jobs reports and other positive economic data, investors see it as impossible for New Zealand’s monetary policy to return to normal.

At its policy meeting last October, the RBNZ raised interest rates by 25 basis points to 0.50% in line with broad market expectations.

Even with these positive expectations, the kiwi dollar failed to capitalize on a lower depreciation due to the strengthening of the greenback dollar, as well as being squeezed by concerns over Covid-19 which will hamper the global recovery.

At the start of the European session, the antipodean currency traded at a six -week low of around 0.6940 against the greenback dollar.