Kiwi dollar spikes as RBNZ challenged on house prices

The currency spiked as news wires lit up with reports of the minister’s letter urging Reserve Bank governor Adrian Orr to consider the effect monetary policy was having on house prices.

The kiwi peaked at 69.89 US cents - up from 69.30 - before easing to 69.70 at 5pm when Orr penned a response in which he agreed to consider the suggestion, but also defended the central bank’s monetary policy settings.

Kiwibank’s head of financial markets, Peter Hunt, said the dollar was hitting new highs as traders took the news to mean future interest rates cuts were off the table.