NZ Dollar Retreats After Short-Lived Rally

The New Zealand dollar fell today against other most-traded currencies, logging the fifth consecutive session of decline against its US counterpart. While the kiwi rose a bit yesterday after the government announced a stimulus package, the rally was short-lived as risk aversion dragged the currency down.
Yesterday, the New Zealand government unveiled a massive NZ$12.1 billion stimulus package, which equals 4% of the country’s GDP. Finance Minister Grant Robertson explained that the economy is expected to decline 1% in 2021 but it would contract by 3% without the package. While the announcement was welcomed by investors initially, it looks like stimulus measures performed by governments and central banks of various nations are not enough to combat the fear of the COVID-19 pandemic in the long run. As a result, market participants seek safer assets, dumping riskier ones, including the New Zealand dollar.
As for economic reports in New Zealand, the Global Dairy Trade Price Index fell by 3.9% at yesterday’s auction after falling by 1.2% at the previous event. Statistics New Zealand reported that the current account deficit narrowed to NZ$2.66 billion in the December quarter (without adjustments for seasonal variations) from NZ$6.26 billion in the previous three months. The actual value was slightly below the median forecast of a $2.83 billion deficit. Seasonally adjusted, the current account deficit was at NZ$1.9 billion.
NZD/USD dropped from 0.5958 to 0.5876 as of 8:32 GMT today, trading near the lowest level since May 2009. EUR/NZD jumped from 1.8432 to 1.8664. NZD/JPY declined from 64.10 to 63.06.

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