Rate pause helps exporters
Monday 1 November 2004
The New Zealand dollar fell sharply yesterday as Reserve Bank Governor Alan Bollard delivered some relief to exporters sweating as the currency headed close to seven-year highs this week.
By The LandlordThe currency fell about a cent against the Australian and United States dollars yesterday, ending the day at A92 cents and US69c. That was well down on the recent peaks of A94c and US70.3c but still high.
And there was more grim news on the trade front with a record $4 billion trade deficit announced by Statistics New Zealand for the September year. The September month deficit of $1 billion was worse than expected, with weak exports and higher imports.
Dr Bollard yesterday lifted the official cash rate a notch to 6.5 per cent, as widely expected, but surprised with a clear message that he has done enough to keep inflation in control.
That was a sharp turnaround from earlier statements from the Reserve Bank that rates would keep rising because the economy was strong, unemployment was low and inflation could get out of control next year.
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It looks like the sleeping giant of New Zealand’s housing market could be stirring, with new REINZ data showing that both sales and prices in Auckland are up.
There’s no sign of a slow-down in Wellington’s property prices with Trade Me Property’s latest data showing that asking prices continue to rise solidly.
Vacancy rates in the commercial property sector are set to increase as changing economic conditions dampen demand.
LVR restrictions were never meant to be a permanent feature of New Zealand’s housing market and ANZ economists argue that some further relaxing of them could soon be on the cards.