New Zealand dollar extended its advance past 70 cents per dollar, a level not seen since June 2018, as the market further priced out the possibility of negative borrowing costs.
The currency rose as much as 1.1% after Finance Minister Grant Robertson released a letter to the central bank expressing concerns over how low rates have stoked home prices, asking it to add house prices to its remit.
The proposal, if adopted, could significantly dim the prospect of further rate cuts or additional bond-buying programs. The market has been paring back bets for negative rates this month, after policy makers projected a more upbeat view of the economic recovery.
The New Zealand dollar strengthened to as high as 70.01 cents per dollar, also boosted by a broader risk on sentiment as investors cheered the start of U.S. President-elect Joe Biden’s formal transition and progress toward the roll-out of Covid-19 vaccines.
The currency was trading at 69.97 cents per U.S. dollar as of 9:28 a.m. in London.