FXStreet (Edinburgh) – Lee Hardman, Currency Analyst at BTMU, noted the performance of the Kiwi dollar following the recent decision by the RBNZ.
Key Quotes
“The New Zealand dollar has strengthened in the Asian trading session following the RBNZ’s latest monetary policy meeting. The RBNZ lowered their key policy rate by a further 0.25 percentage point as expected to 3.00%”.
“The RBNZ acknowledged that the New Zealand dollar has declined significantly since April and along with lower interest rates has led to an easing in monetary conditions. The weaker New Zealand dollar is expected to provide support to the export and import competing sectors. The RBNZ continues to believe that “further depreciation is necessary given the weakness in export commodity prices”. The world price for New Zealand’s dairy exports has fallen sharply. However, the RBNZ has softened its tone by no longer stating that the New Zealand dollar is “overvalued” and that “a further significant downward adjustment is justified”.
“The weakness in dairy prices and likelihood of further RBNZ monetary easing will likely keep the New Zealand dollar under downward pressure in the near-term although the scale and pace of further weakness will likely prove more modest”.
“Short speculative New Zealand dollar positions were close to record highs heading into today’s RBNZ meeting which may also dampen the scope for further downside in the near-term”.
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