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13 Mar 2014
Flash: NZD overvalued? - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, sees the NZD overvalued after the RBNZ rate hike.
Key Quotes
"The RBNZ’s decision to raise its key policy rate by 0.25 point to 2.75% overnight and in the process become the first G10 central bank to begin raising rates has also made current Fed monetary policy appear more dovish weighing upon the US dollar".
"The RBNZ also signalled that it intends to raise its key policy rate aggressively in the coming years reaching around 3.75% by the end of 2014, 4.50% by the end of 2015, and 5.00% by the end of 2016."
"RBNZ Governor Wheeler stated that he “wouldn’t expect significant gains” for the New Zealand dollar from RBNZ monetary tightening and that a higher exchange rate would be a “concern” although “unlikely to be sustained in the long-run”.
"We would agree that with the New Zealand dollar already very overvalued and an aggressive RBNZ rate hike cycle already discounted by the interest rate market, the scope for further upside appears modest. If the New Zealand dollar strengthens more significantly then it would also likely act to dampen the pace of RBNZ rate hikes required ahead."
Key Quotes
"The RBNZ’s decision to raise its key policy rate by 0.25 point to 2.75% overnight and in the process become the first G10 central bank to begin raising rates has also made current Fed monetary policy appear more dovish weighing upon the US dollar".
"The RBNZ also signalled that it intends to raise its key policy rate aggressively in the coming years reaching around 3.75% by the end of 2014, 4.50% by the end of 2015, and 5.00% by the end of 2016."
"RBNZ Governor Wheeler stated that he “wouldn’t expect significant gains” for the New Zealand dollar from RBNZ monetary tightening and that a higher exchange rate would be a “concern” although “unlikely to be sustained in the long-run”.
"We would agree that with the New Zealand dollar already very overvalued and an aggressive RBNZ rate hike cycle already discounted by the interest rate market, the scope for further upside appears modest. If the New Zealand dollar strengthens more significantly then it would also likely act to dampen the pace of RBNZ rate hikes required ahead."