Kiwi at four-month high against Aussie

  • 14/10/2015
Kiwi at four-month high against Aussie

The New Zealand dollar has risen to a four-month high against its trans-Tasman counterpart on speculation mortgage rate hikes by Westpac may put pressure on the central bank to ease policy.

The kiwi rose as high as 92.40 Australian cents, trading at 92.27 cents at 5pm in Wellington from 91.20 cents yesterday.

The Australian dollar dropped after Westpac announced plans to lift its floating mortgage rate by 20 basis points to reflect new risk weightings under a tougher regulatory regime that prompted Australia's second biggest bank to raise more capital.

The move prompted traders to increase their bets for another rate cut by the Reserve Bank of Australia to prevent Westpac's move from cooling the housing market and chilling development.

"The move by Westpac in Australia to raise lending rates by 20 basis points immediately led the market to believe that the RBA will be forced to cut rates in the coming months," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington.

"The Australian dollar got sold aggressively and kiwi benefited from that on the kiwi/Aussie cross."

The kiwi was little changed at 66.76 US cents at 5pm in Wellington from 66.62 cents yesterday, at 79.90 yen from 79.78 yen and at 58.62 euro cents from 58.65 cents, while advancing to 4.2378 Chinese yuan from 4.2213 yuan.

The trade-weighted index advanced to 71.64 from 71.36 yesterday.

NZN

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