RBNZ: New Zealand banks at little risk from interest rate rises

RBNZ: New Zealand banks at little risk from interest rate rises

“Banks in the country have relatively little risk from surging interest rates as they are required to hold sufficient capital to cover potential losses,” said Reserve Bank of New Zealand (RBNZ) early Monday per Reuters.

The RBNZ released excerpt of its May 2023 Financial Stability Report amid the ongoing banking fears due to the First Republic bank’s latest fallout.

Also read: Sources: PNC, JPM putting in final bids for First Republic in FDIC auction

Additional statements

Banks in New Zealand ‘manage this risk by matching the repricing profile of their assets and liabilities, and by using financial products to hedge any differences.’

They are also required to hold sufficient capital to cover potential losses arising from any remaining interest rate risk, which incentivises banks to carefully manage the risk.

NZD/USD grinds

With the RBNZ’s assurance, the NZD/USD battles with the market’s risk-off mood, as well as downbeat China data, while making rounds to 0.6170-80 and prints mild gains by the pres time.

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