The New Zealand dollar rose today against all other major currencies at a fastest pace in months as the Finance Minister Michael Cullen cut the income tax supporting the national economy.
Kiwi (a nickname for the New Zealand’s currency) climbed today for a third consecutive day against the U.S. dollar — it’s biggest gain since late February as the investors favored high-yielding local bonds over the U.S. notes on an increased yield gap.
Michael Cullen said today in his 2008/2009 budget that the tax cuts, which will start on October the 1st this year, will increase the people’s buying power by between 22 and 55 billion New Zealand dollars, busting the national economic growth.
Market analysts believe that the government won’t stop on tax cutting only in order to improve the output growth. The record high New Zealand’s interest rate (8.25 percent), which for a long time was a boon to the NZD’s growth (especially against yen), will be lowered by at least 1 percent during the next 12 months. But these expectations are not yet included into the Kiwi’s Forex value.
NZD/USD rate grew today from 0.7773 to 0.7855 as of 8:26 GMT with a daily maximum at 0.7893 (a highest value since May 7). NZD/JPY rose from 80.08 to 81.20 with a daily high at 81.39, as the carry trade positions increased. AUD/NZD declined at a fastest pace since January 22 — it went down from 1.2375 to 1.2188 with a daily minimum at 1.2185 as of 8:26 GMT.
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