NZ English: rate hike is priced in
The clear-cut RBNZ plans to hike rates in March makes kiwi one of the most attractive bull trades in the coming year. However, the New Zealand government evidently wants to see the currency weaker than the current levels. “The currency is higher than its 30-year average. We would like to see it in the mid-$0.70s”, NZ finance minister Bill English said in an interview to CNBC.
"Some commentators think it's going to go higher as we get into the interest rate cycle. However, we believe most of the interest rate cycle has been built into the pricing now," Mr. English said.
The New Zealand economy, which is expected to outpace most of its developed markets peers in the coming year, is often called a "rock star economy" of 2014. Mr. English disagrees with this name, referring to the weak housing market, high inflation and questionable Australia and China growth prospects.
Nevertheless, in general Mr. English is optimistic on the economy's prospects this year. "2014 will be a good year. Good economic reform, good fiscal management, improving the competitiveness of our export sector, and that's what would give us longer-term growth rates," he said.