Market Overview
Central Bank action and Inflation continues to dominate market moves this year with the Ukraine War raging on in the background hitting currencies hard.
The New Zealand Dollar (NZD) has earned the spot of the second to worst performer in 2023 so far ahead of the Japanese Yen (JPY), whereas the US Dollar (USD) has been the strongest performer.
As predicted the RBNZ raised their interest rate 50 basis points from 4.25% to 4.75% recently but defied expectations of a signal for a lower peak. In line with recent weather events there’s still room to move higher than the 5.5% initial top with policy guidance still required at the current pace. At 5.5% this would make it one of the highest interest rates in the developed world. With cyclone Gabrielle destroying large parts of New Zealand’s North Island the battle with inflation just got tougher for the RBNZ with several billions said to be needed to rebuild infrastructure and homes. Inflation currently stands at 7.2% for the fourth quarter of 2022 way to high. Read more