Australia’s dollar snapped the steepest advance versus its New Zealand counterpart in two weeks after the bigger nation’s central bank reiterated that weakness in the currency would aid the economy.
The nation’s two-year swap rate was near the lowest in 4 1/2 years relative to its New Zealand equivalent on speculation the Reserve Bank of Australia will cut borrowing costs already at a record low. New Zealand’s central bank has signaled it will raise its benchmark interest rate next year. The kiwi was near a four-month high against the greenback as JPMorgan Chase & Co. said chart analysis signaled the currency may extend gains.
“A soft exchange rate is what the RBA wants,” said Lee Sue Ann, a treasury economist at United Overseas Bank Ltd. (UOB) in Singapore. “Given the recent recovery in the Aussie dollar, I think the RBA is very careful not to close the door for rate cuts ahead.”
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