The RBNZ came out with a decision to raise the NZD cash rate by 25 points to 3.5 from 3.25.
This decision was largely expected though normally, even in this case, the currency tends to rise substantially.
Strangely enough, the NZD not only refused to rise, but even went down substantially.
Explanations of several forex columnists revolved around the statement of an RBNZ governor that this would be the last raise for some time. While this statement is a bit of a let down, this point of view ignores the fact that the NZDD has the highest cash rate at the moment.
The AUD has a rate of 2.5 right now so the NZD has a significantly higher rate. Sure its a far cry from the 7% in 2008 for the AUD, but 3.5 for the NZD is certainly nothing to sneeze at.
Anyway regardless of this curious behavior, I am happily trying to go long on the NZD right now in an effort to use it as a replacement / supplement for my AUD in so far as my carry trades are concerned.
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