NZ Beats Australia

New Zealand’s dollar climbed to a 2 1/2-year high against Australia’s currency as the smaller nation’s retail sales grew faster than economists predicted, boosting bets its central bank will raise interest rates.

The so-called kiwi climbed to its strongest in 17 months against the greenback as a Credit Suisse Group AG index showed the Reserve Bank of New Zealand will probably increase borrowing costs by 29 basis points over 12 months. Both the Australian and New Zealand dollars are poised to gain against their U.S. peer this week as optimism about global growth boosted demand for higher-yielding assets.

“The New Zealand economy is recovery and outperforming its peers, and the kiwi dollar is likely to push higher,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “The Reserve Bank has a mild tightening bias, and in a world of easy policy and quantitative easing, a tightening bias is all you need to stand out from the pack.”


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