The New Zealand dollar crashed today after the Reserve Bank of New Zealand announced its monetary policy decision. While the central bank did not change interest rates, the statement sounded rather dovish.
The RBNZ decided to keep its main interest rate at 3.5 percent during today’s policy meeting. Yet the statement sounded rather negative for the NZ dollar as Governor Graeme Wheeler was unhappy about the strength of the currency, saying:
While the New Zealand dollar has eased recently, we believe the exchange rate remains unjustified in terms of current economic conditions, particularly export prices, and unsustainable in terms of New Zealandâs long-term economic fundamentals. We expect to see a further significant depreciation.
Regarding the policy outlook, Wheeler explained:
In the current circumstances, we expect to keep the OCR on hold for some time.
The kiwi crashed against other most-traded currencies after the announcement, even reversing its rally against the euro.
NZD/USD sank from 0.7444 to 0.7329 as of 22:25 GMT today, reaching the lowest level since March 2011. NZD/JPY dropped from 87.46 to 85.98, touching the weakest rate since October 31. EUR/NZD rallied from 1.5275 to 1.5389, bouncing from the daily low of 1.5417.
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