The New Zealand dollar fell today following the monetary policy announcement from the Reserve Bank of New Zealand made by the end of the Wednesday’s trading session. Of course, the policy announcement from the US Federal Reserve has also played its part in the currency’s decline.
RBNZ Governor Graeme Wheeler left the main interest rate unchanged at 2.75 percent. He mentioned that “financial market volatility has eased in recent weeks” but also stated that “concerns remain about the prospects for slower growth in China and East Asia especially.” Wheeler then added that “the sharp fall in dairy prices since early 2014 continues to weigh on domestic farm incomes.”
In the end, the Governor reiterated his phrase from the previous statements:
To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely.
Of course, the outlook for lower policy rate is not good for the New Zealand currency. But perhaps even more damaging was the statement from the Fed. It reignited talks about a December rate hike, and this drove commodities down together with commodity-related currencies.
NZD/USD fell from 0.6682 to 0.6668 as of 6:48 GMT today after falling 1.2 percent yesterday. NZD/JPY dropped from 80.94 to 80.54. EUR/NZD gained from 1.6341 to 1.6398.
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