The news that Adrian Orr, chief executive of the New Zealand pension fund, was appointed as the next governor of the central bank was welcomed by investors. Investors had feared that the new Labour-led government requiring the central bank to take on a dual mandate could lead to a further departure from tradition.
New Zealand's coalition government advocates that the economy should serve the people, and housing and employment have become the policy priorities of the new government.
As a result, the government launched a review of the central bank law to make employment maximization the central bank's monetary policy goal, alongside inflation, which is a historic change for the central bank of New Zealand. The Bank of New Zealand is the first central bank in the world to adopt a formal inflation target.
In addition, the finance minister has said he wants a central bank governor who supports the dual mission. Analysts said the comments raised concerns among some that the central bank might not be able to focus on inflation.
Mr Orr's appointment calmed some of those concerns and pushed the New Zealand dollar to a two-week high. Orr is a former vice president and chief economist of the Bank of New Zealand.
"Orr is very famous in the market," said a former central bank official who worked with Orr on the monetary policy committee of the Bank of New Zealand in the 1990s.
The New Zealand dollar hit $0.6930 against the dollar on Monday night and was still trading near that level on Tuesday, trading at about $0.6929.
The New Zealand dollar, the 11th most traded currency in the world, has fallen nearly 6 per cent since the general election in September.
"he is thought to be calm," said Stuart Ive, a broker at OM Financial in Wellington.
Orr spent four years as vice president of the central bank before joining the New Zealand Pension Fund (New Zealand Super Fund) in 2007. He will succeed Spencer as governor of the central bank on March 27.
Grant Robertson, New Zealand's finance minister, said on Monday that the law regulating the central bank's mandate might not take effect until March, but that he and Mr Orr would "seek unity of policy objectives in a way consistent with the direction of reform".
Robertson told Reuters in November that in addition to inflation, the willingness to increase employment as a priority would be the key to the acceptance of the next president chosen by the central bank.
"the chairman of the central bank assured me that Mr Orr could do so and that he would be able to manage this period of change well for the board, and I accepted these assurances," Mr Robertson told reporters on Monday.
In addition to his background in central banks and private banking, Orr is also considered to have strong communication skills-a necessary condition for central bankers.