Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Forecast to Rally as RBNZ Tighten Investor Lending Rules

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One Hundred New Zealand Dollars (NZD)

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate rallied by around 0.81% on Thursday afternoon.

Although Australian data produced mixed results on Thursday, the ‘Aussie’ (AUD) strengthened versus some of its major peers. This can be attributed to rising oil prices and a softer common currency.

The New Zealand Dollar, meanwhile, dived versus nearly all of its most traded currency rivals. This is as a result of the Reserve Bank of New Zealand (RBNZ) signalling that it may tighten the rules on lending to property investors in the hop of cooling rising house prices in Auckland.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trending in the region of 1.0393.

Australian Dollar (AUD) Exchange Rate Fluctuates on Mixed Data

With Australian data producing varied results, the ‘Aussie’ fluctuated versus many of its major peers. January’s seasonally-adjusted Retail Sales equalled the median market forecast of a rise by 0.4% on the month. However, Trade Balance showed that the trade deficit widened in January from -503 million to -980 million.

‘The retail trade ‘pulse’ was fairly weak over the final months of 2014, with average monthly growth of just 0.2 per cent over October to December,’ Deutsche Bank chief economist Adam Boyton said. ‘The step up to 0.4 per cent in January is therefore encouraging.’

‘Looking ahead, we think there is a reasonable prospect of a lift in the retail sector, especially given lower petrol prices, lower interest rates and signs of renewed strength in the housing market,’ added Boyton.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate dropped to a low today of 1.0278.

New Zealand Dollar (NZD) Exchange Rate Forecast to Dive on RBNZ Intervention

As mentioned above, the RBNZ are exploring ways to cool the rampant Auckland housing market without raising interest rates. It seems that they are looking to tighten the rules on lending to property investors.

‘It looks to me like this is the first and necessary step to implementing some macro-prudential tools for investors,’ said Shamubeel Eaqub, principal economist at the New Zealand Institute of Economic Research Inc. in Auckland. ‘The key constraint is how do you define an investor?’

‘It’s trying to say these investors are likely to face more stringent conditions when it comes to borrowing in terms of how much gearing they can have,’ said Eaqub. ‘It’s heading in the right direction, but the underlying issue hasn’t changed. It’s still very much about supply and until we resolve that, these things are essentially just buying time.’

Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Forecast to Hold Gains

Given the extent of the appreciation, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is likely to hold gains for the remainder of Thursday’s trade. A lack of data pertaining to New Zealand for the rest of the week will see the ‘Kiwi’ subject to geopolitical changes and fluctuations in the commodities market.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate reached a high today of 1.0404.

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