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Market Commentary / Charts
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The Kiwi made significant gains after the NZ Government handed
down a far more stimulatory, tax-cutting budget than the market
expected.
New Zealand Finance Minister Cullen - Markets have overreacted
to fiscal stimulus in budget, tax cuts won't have effect on
timing of RBNZ interest rate cuts, NZD/USD rate well out of
line, markets underestimating economic slowdown, CPI to remain
above Reserve Bank of New Zealand target band in short-run,
won't prompt hikes
Australian Dollar is still charging towards Parity with the US
Dollar and its highest level since the currency was floated. The
Australian Dollar closed at 96.54 against the US dollar.
Westpac Institutional Bank economist Robert Rennie said further
rises now appeared "inevitable", and "this will pave the way for
a move to parity over coming months".
Commonwealth Securities economist Craig James said the Aussie -
which has increased 10 per cent in value this year - was
enjoying "a perfect mix". "We had expected the Aussie to
consolidate near US94c for a while, but all of a sudden it is at
US96c and parity is no longer a distant prospect," he said.
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