Talking Points:
- The New Zealand Dollar was boosted Monday
- Adrian Orr will be the next Reserve Bank of New Zealand Governor, the Prime Minister announced
- Questions remain over possible tweaks to the RBNZ’s mandate
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The New Zealand Dollar gained Monday following the announcement of Adian Orr as Governor of the Reserve Bank of New Zealand.
Orr currently runs the New Zealand Superannuation Fund and his term at the helm of the RBNZ will begin on March 27, 2018. Jacinda Adern the country’s Prime Minister said that she was appointing Orr with the unanimous approval of the central bank’s leadership.
Grant Spencer has been acting Governor since Graeme Wheeler stepped down at the end of September. Adrian Orr is chiefly known beyond New Zealand for former Prime Minister Bill English’s criticism of his compensation earlier this year.
Still, the markets seem to have cheered his appointment, probably not least because it ends at least that uncertainty.
Questions remain though. The government wants to add some sort of employment mandate to the RBNZ’s inflation-busting remit, a prospect to which the RBNZ has shown some resistance. It is possible that the introduction of such a remit would mean that New Zealand interest rates remain lower than they otherwise would have done, and Mr. Orr’s thoughts on this matter are sure to be eagerly sought.
More broadly the New Zealand Dollar has suffered both from the uncertainties generated by this September’s’s general election. It has also been hit by a broadly strengthening US Dollar and the suspicion that the RBNZ favours a weaker currency.
Still, it seems to have found some support around current levels, at which the downtrend from this year’s highs seems to have broken.
Much will depend however on what the US Federal Reserve does this week. A rate increase is held to ba all-but certain so the prognosis as to how many more there may be will be crucial.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
