Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates overnight, to put you in the best position for when you exchange currencies.
New Zealand Dollar
New governor, new rules? The New Zealand dollar jumped half a cent against the pound overnight, as did the Australian dollar, as new Reserve Bank of New Zealand governor Graeme Wheeler used his inaugural address last Friday to dispel rumours he might cut interest rates.
In his first speech, since taking the position a month ago, Mr. Wheeler emphasised that there are clear limits to what monetary policy can do to help New Zealand’s economy. He ruled out quantitative easing in the style of the UK or US and, importantly, noted that “analysis of past OCR cuts in New Zealand shows on average minimal or no intra-day impact on the exchange rate.”
In other words, though some people would like the RBNZ to cut interest rates, and so weaken the New Zealand dollar to boost exports, evidence shows lower rates don’t have this effect. Given this, unless inflation warrants, Mr. Wheeler shouldn’t be expected to cut cash rates.
This aided the New Zealand dollar because, of course, the prospect of unchanged interest rates increases the available returns for New Zealand bonds and equities. If you plan to sell the New Zealand dollar then, this means you can expect a higher total when you buy UK pounds or US dollars.
Find Out More
I do hope you’ve enjoyed reading this post. To find out more.
Read our Daily Market Commentary to find out what’s affecting the rates today.
Look through our Top Tips to maximise your foreign currency transfer.
Get in Touch if you have any questions about exchanging currency.