The Reserve Bank of Australia (RBA) has left its official cash rate unchanged at 2.25%, immediately putting some distance between the New Zealand and Australian dollars reaching 1:1 parity.
The New Zealand dollar has been just under parity in recent days, peaking on Monday at A99.78c and trading at A99.12 before yesterday's RBA announcement, falling afterwards to A98.32.
Australia, New Zealand's second-largest trading partner after China, is facing a sluggish economy because of China's economic cooling, mirrored in price plunges in iron ore, hard coking coal and other resource sector elements.
However, in what was a surprise to many, instead of cutting rates to stimulate the economy, RBA governor Glenn Stevens said it was appropriate to hold the OCR ''for the time being''.
''Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The [RBA] board will continue to assess the case for such action at forthcoming meetings,'' he said in a statement.
Craigs Investment Partners broker Peter McIntyre said the lack of a cut was ''a bit of a surprise'', given there was a 70% expectation of a cut, and 30% against.
''They are worried about what's happening globally and their housing, particularly Sydney and the East Coast,'' Mr McIntyre said of galloping east coast house prices.
Highlighting Mr Stevens' decision was a separate AAP report yesterday that
low interest rates and cheaper petrol had fuelled a nationwide spending spree, with retail spending growing at its strongest pace in five months.
While the OCR hold dampened the kiwi's strength against its Australian counterpart, Mr McIntyre believed it was ''just a matter of time'' until the RBA repeated its February 0.25 basis point cut again, which would probably prompt parity.
Because diminishing commodities prices were affecting the Australian resource sector so widely, he believed the kiwi would ''outperform'' the Australian dollar for the next three to five years.
He noted that while the question of immediate parity had eased after the RBA announcement, New Zealand was still looking less attractive for Australian investors.
Craigs research released yesterday expects full-year 2015 iron ore prices to decline 47.2% year on year, in US dollar terms, compared with earlier forecasts for a decline of 40.2% for the same period.
''China has provided a 10-year-cycle commodities boom, but that's coming off the boil now,'' Mr McIntyre said.
Also, Craigs expects premium and standard hard coking coal prices to decline by 17.2% and 15.9% respectively, year on year, a fall only slightly worse than previously forecast.
On the question of businesses hedging against the parity equation, Mr McIntyre said many companies would already be covered.
However, he said in the medium term, when the contracts ran out, it might become too expensive to replace them and they might have no cover.
''Once the contracts are off they can't be replicated and those companies will be facing stresses ... feeling the pain all the way up,'' he said.
