The New Zealand dollar softened and short-term bonds flattened after yesterday's Reserve Bank monetary policy statement.
The kiwi ended at 52.45/52USc after bouncing as high as 53.40c when the central bank announced its 4.50 per cent official cash rate.
The rate was higher than the 4.25 per cent expected by the market.
"It
looks like local players got a little bit long and we've basically been under pressure for the rest of the day along with the Australian dollar," a dealer said.
The Reserve Bank appeared to be anticipating currency gains this year, the dealer said. "Given the Reserve Bank are happy to have interest rates a lot lower, I think they're expecting the currency to appreciate. Slow appreciation during the year, nothing dramatic."
"However, it's pretty hard going for the currency at the moment, with the aussie under pressure and commodities so weak."
On the debt market, bank bills spiked higher in response to the Reserve Bank's statement and the bond yield flattened slightly.
The 90-day bank bill yield bounced up to 4.64 per cent immediately after the statement and finished at that level, from 4.49 per cent on Tuesday.
Overnight cash closed at 4.50 per cent from 4.10 per cent. - NZPA
