New Zealand Currency Attempts to Rise After Slump vs. US Dollar

The New Zealand tumbled today, reaching the lowest level in three weeks on the outlook that the Federal Reserve would buy less assets to stimulate the US economy, before regaining its strength of the comments of New Zealand’s central bank. The currency extended its gains versus the euro.

The New Zealand currency gained after the Reserve Bank of New Zealand said that the high export prices and the reconstruction in Canterbury, which were hit by the earthquake, were likely to offset the slowing consumer spending. The Bank’s officials also said that the borrowing costs would probably be raised in the future. Despite this comments the kiwi feel as it seem that the moves of the greenback outweigh all other factors before the meeting of the Federal Open Market Committee.

New Zealand with its 3 percent benchmark rate profits from the so-called carry traders, which borrow in the countries with lower interest rates to loan in the countries with higher rates. New Zealand’s central bank has kept the interest rates unchanged on the last meeting of its members.

NZD/USD dropped from 0.7490 to 0.7405 and rebounded later, trading near 0.7466 as of 22:57 GMT. EUR/NZD fell from the opening rate of 1.8490 to 1.8453 after it jumped to 1.8567.

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