NZ dollar near 2-week highs on appointment of "known entity" Orr to head central bank
WELLINGTON, Dec 12 (Reuters) - The New Zealand dollar hovered near two-week highs on Tuesday as investors welcomed the appointment of pension fund chief Adrian Orr, a former central bank official, to head the Reserve Bank of New Zealand from March.
Investors were relieved by the selection of an official with extensive expertise in monetary policy, and expected he would not veer too far from the status quo as he carries out a new dual mandate.
The government is currently reviewing the Reserve Bank Act with the aim of adding maximising employment as a monetary policy goal alongside inflation targeting.
Stuart Ive, a Wellingon-based dealer at OM Financial, said Orr was a “known entity within the NZ markets,” providing some relief to investors.
Orr served as chief economist at the RBNZ between 1997 and 2000, and as deputy governor of the RBNZ for four years before joining the New Zealand Super Fund in 2007.
“He’s perceived as fairly level headed,” Ive said.
“I think that level-headed approach with whatever is rolled out in terms of the dual mandate will hopefully prevail in his term as the governor and I think that’s really what the market is quite pleased about.”
The New Zealand dollar hit a two week high of $0.6930 late on Monday against the U.S. dollar, and remains close to those levels at around $0.6910.
The currency, the world’s 11th most-traded, has fallen nearly 6 percent since the September election brought in a more protectionist Labour-led coalition in the first change of government for a decade.
BNZ Currency Strategist Jason Wong said the news of Orr’s appointment took away some of the uncertainty around the change in government which has been weighing on the New Zealand dollar.
“The market has been positioned a bit short New Zealand dollar,” he said referring to bets to sell the currency.
“I guess the market sees this as a positive ... a known quantity, a very well-respected person, so that seemed to be a good excuse for some of these (investors) to take away some of their short positions.”
Orr will take over from Grant Spencer who is due to retire on March 27. (Reporting by Ana Nicolaci da Costa and Charlotte Greenfield; Editing by Eric Meijer)