-Graeme Wheeler, RBNZ Governor
Another success story from the RBNZ. While central bank's hawkish view and rate hikes can slow down economic growth, all decisions made by Graeme Wheeler's team proved to be successful so far.
New Zealand currency received another strong bullish bias from the central bank's actions on Wednesday, as the RBNZ revealed the success of its restrictions on mortgage lending. The NZD/USD pair inched higher to 0.8599, approaching a strong resistance at 0.8605, while a move above it will clear the way for a recent high at 0.8636. In October 2013 the central bank imposed a mortgage-lending criteria for domestic banks that were supposed to restrict borrowers with less than 20% equity in receiving a mortgage. The restriction was introduced as a measure to cool down house-price inflation, which had soared above 20% in the nation's most populated city– Auckland, as low borrowing costs attracted many investors into the housing market. Even despite the success of new limitations, the Reserve Bank of New Zealand began raising interest rates, becoming the first developed country to start tightening its monetary policy, in attempt to slow the overall inflation, which was heading to the mid-point of central bank's 1-3% target band. New Zealand offers a relatively high rate of return, attracting more investors and pushing the currency well above historical levels.
© Dukascopy Bank SA