Wednesday, December 06, 2006

New Zealand keeps rates steady

New Zealand todat held rates steady at 7.25 but said that there was a better chance that the CB would raise rates in 2007 because the country's economy has not slowed as forcast.

``There is an increased chance that some further increase in interest rates may be required to ensure that inflation pressures abate,'' Governor Alan Bollard said in a statement released in Wellington today. ``Economic activity has been stronger than expected.'' The currency rose slightly in response to this news.

Rates have not moved in New Zealand since Dec 2005 but all the while "Hawkish" talk has keep a strong interest in owning the New Zealand currency. Only Iceland (ISK) has higher rates among nations with the top ratings at Moody's Investor service.

As regular readers to this column know I am a big fan of owning high yielding currencies. Iceland is certainly on my radar screen although I am not sure now is the correct time to buy it. As for Kiwi you might try buying that agianst say, the Euro which I feel is slightly extended. This trade would be for those traders who do not like being long dollars outrite.



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