The kiwi touched 81.22 US cents this morning, its lowest since Dec. 30. Photo / Kenny Rodger
The New Zealand dollar fell to a month-low as investors who had been holding the currency in anticipation the central bank may have hiked rates yesterday reduced their reserves.
The kiwi touched 81.22 US cents this morning, its lowest since Dec. 30. The local currency was trading at 81.41 cents
at 8am in Wellington, from 81.78 cents at 5pm yesterday. The trade-weighted index slipped to 77.19 from 77.44 yesterday.
New Zealand's Reserve Bank yesterday kept the benchmark interest rate at an historic low 2.5 per cent in a move anticipated by most economists. Still, traders had priced in about a 35 per cent chance of a hike and many investors had refrained from selling down their holdings during turmoil in emerging markets in case they missed out on the benefit of a hike.
"The markets held off applying a risk discount to the New Zealand dollar because of the prospect that the RBNZ was going to increase the yield," said Sam Tuck, senior FX strategist at ANZ New Zealand. "With the RBNZ on hold until March when they are going to hike rates, and that is fully priced anyway, that freed up the market to apply a risk discount to the kiwi."
The New Zealand dollar touched 92.56 Australian cents this morning, its lowest in more than two weeks, and was at 92.70 cents at 8am in Wellington, from 93.60 cents yesterday.
