NZD/USD Increases close to 0.6240 as RBNZ Increases Ocr by 50 Basis Points to 4.75 Percent

Demand for the NZD/USD pair has surged dramatically as a result of the Reserve Bank of New Zealand's (RBNZ) hawkish attitude on interest rates. Reserve Bank of New Zealand Governor Adrian Orr has raised the Official Cash Rate (OCR) by 50 basis points (bps) to 4.75 percent. It was widely anticipated that a decision to increase interest rates by 50 basis points would be made. The RBNZ hiked interest rates by 75 basis points during its November monetary policy meeting, something investors should be aware of.

As the Reserve Bank of New Zealand (RBNZ) failed to significantly cut the Consumer Price Index (CPI) in the New Zealand economy, a significant rate increase was anticipated. Inflationary pressures in the New Zealand economy have not yet reached their pinnacle as a result of the RBNZ's continuous policy tightening, but the labor market has begun to manifest damage.

Even though New Zealand Prime Minister Chris Hipkins has committed a NZ$300 million ($187.08 million) disaster aid package, the recent release of helicopter money may boost inflationary pressures.

The statement of monetary policy will determine whether the RBNZ maintains its goal of an OCR peak of 5.5% by May.

Statistics January exports and imports data were released by New Zealand during the early Asian session. Compared to the previous report, exports declined to $5.47 billion from $6.72 billion, while imports grew. This indicates that domestic demand is extremely robust.

Indicative of their caution, investors have begun discounting Federal Reserve (Fed) interest rates to 5%. Yet, investors' appetite for risk is growing as risk-perceived assets gain momentum. The US Dollar Index (DXY) fails to surpass the important level of resistance at 103.90. In the future, the USD Index will be affected by the release of the Federal Open Market Committee's minutes (FOMC).