Kiwi flies on stonking inflation

Economists expect the central bank will take its foot off the accelerator in an effort to rein in the 4.9% annual pace of inflation in the September quarter, with traders pricing in a 50% chance of the RBNZ hiking the official cash rate half a percentage point to 1% in November.

“It was a stonkingly strong print,” said Imre Speizer, head of NZ strategy at Westpac. “The kiwi didn’t get that much of a bounce out of it, but when the offshore market jump in, I can see the Europeans and Americans taking it back above 71 US cents.”

The NZ dollar traded at 70.79 US cents at 3pm in Wellington from 70.36 cents on Friday, its highest level in more than three weeks.

The strong currency was felt on the S&P/NZX 50 Index, with exporters leading the benchmark lower as it fell 13.68 points, or 0.1%, to 12,998.51.