5 Mar 2015
RBNZ positioning for monetary easing? – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, notes that the RBNZ’s recent announcement regarding how to define a “property investment loan” might actually be the central bank positioning for easing.
Key Quotes
“In a world where nearly every major central bank bar the Fed and the BOE are in easing mode, the RBNZ may have just taken steps to allow it to join in on the act.”
“The RBNZ announced that it is studying how to define a “property investment loan” with an intention to force local banks to include these loans in a specific asset sub-class and hold specific regulatory capital against them. By doing this the RBNZ will be in a position to target this specific sector.”
“This might be a desire say for example if the RBNZ eased its monetary stance but did not want to fuel speculative investments in the property sector.”
“Based on our valuation models, the New Zealand dollar is the most over-valued G10 currency but at about 7-8% is hardly at problematic levels from a valuation perspective.”
“So while the RBNZ may be positioning itself for action, we are not convinced that is required purely from an FX perspective and hence perhaps the NZD/USD sell-off today is overdone. Of course the RBNZ itself appears more concerned about valuation that we believe is justified.”
Key Quotes
“In a world where nearly every major central bank bar the Fed and the BOE are in easing mode, the RBNZ may have just taken steps to allow it to join in on the act.”
“The RBNZ announced that it is studying how to define a “property investment loan” with an intention to force local banks to include these loans in a specific asset sub-class and hold specific regulatory capital against them. By doing this the RBNZ will be in a position to target this specific sector.”
“This might be a desire say for example if the RBNZ eased its monetary stance but did not want to fuel speculative investments in the property sector.”
“Based on our valuation models, the New Zealand dollar is the most over-valued G10 currency but at about 7-8% is hardly at problematic levels from a valuation perspective.”
“So while the RBNZ may be positioning itself for action, we are not convinced that is required purely from an FX perspective and hence perhaps the NZD/USD sell-off today is overdone. Of course the RBNZ itself appears more concerned about valuation that we believe is justified.”