The New Zealand dollar continued its decline overnight, falling to an eight-week low, as speculation grows that the Reserve Bank could start cutting interest rates as early as next month.
The kiwi touched 73.30 US cents, and was trading at 73.38 cents at 8am in Wellington, from 73.83 cents at
5pm yesterday. The trade-weighted index dropped to 76 from 76.45 yesterday.
The New Zealand dollar slid as expectations grew that weak inflation, an elevated local currency and falling dairy prices would prompt the Reserve Bank to start cutting interest rates this year.
ANZ New Zealand Bank yesterday joined Deutsche Bank and ASB Bank in forecasting 50 basis points of cuts over coming months, and traders are pricing in a 42 per cent chance of a cut in interest rates at the upcoming June 11 meeting, according to the Overnight Index Swap Curve.
"NZD/USD has had the dubious honour of being the worst performing currency by some margin over the past 24-hours," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note.
