New Zealand Dollar Backs Off After RBNZ Cuts Rates

The New Zealand dollar slumped today, reversing yesterday’s gains. New Zealand’s central bank performed an interest rate cut overnight and signaled that additional cuts are likely.
The Reserve Bank of New Zealand cuts its main interest rates by 25 basis points to 2.75 percent today. Analysts were expecting such move, and the real downer was the very dovish statement that accompanied the decision.
The central bank revised its outlook for global growth down, in particular due to concerns about the economic performance of China. RBNZ Governor Graeme Wheeler admitted that the drop of the New Zealand dollar was supportive for the domestic economy. Yet he still said that “further depreciation is appropriate” due to the sharp drop of commodity prices. And in the end, he concluded that considering the current circumstances additional monetary easing is probable:

At this stage, some further easing in the OCR seems likely. This will depend on the emerging flow of economic data.

Extremely dovish stance of New Zealand policy makers threw the kiwi back into decline following yesterday’s attempts to rally.
NZD/USD slid from 0.6391 to 0.6304 as of 10:44 GMT today. NZD/JPY edged down from 76.98 to 76.39 but was trading far above the daily low of 75.09. NZD/CAD sank 1.7 percent from 0.8473 to 0.8327.

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