The New Zealand dollar tumbled as the government raised efforts to rein in Auckland’s bubbling housing market, igniting bets for a move to free up the Reserve Bank of New Zealand to cut interest rates.
Last weekend, the New Zealand administration it would allocate additional $29 million to the Inland Revenue Department in the 2015 budget to go after property investors, tighten regulations on investment gains, and connect transactions to IRD numbers, while evaluating a withholding tax for foreigners.
The government was seeking to address the increasing woes regarding the pace of Auckland house price inflation, which could give the central bank further freedom to reduce rates to weaken dairy commodity prices and a higher currency.
Kiwi declined to 64.91 euro cents from Friday’s 65.94 euro cents, 74.26 US cents from 74.74 US cents, 47.18 British pence from 47.38 British pence, and 92.35 Australian cents from 92.73 Australian cents. Against the Japanese, the currency stood at ¥88.58 from ¥89.21.
The New Zealand dollar started lower on the news about the government’s additional measures to calm the housing industry. “This should free the RBNZ up to consider other factors, including New Zealand dollar strength,” according to ANZ’s Sharon Zollner and Sam Tuck.
Meanwhile, the BNZ-BusinessNZ Performance of Services Index will be released today.
The material has been provided by InstaForex Company – www.instaforex.com