The New Zealand-Australian dollar cross rate rallied briefly then back fell after the Reserve Bank of Australia (RBA) cut its official cash rate for second time this year.
The cross rate rallied by about 40 basis points to A96.50c immediately following the RBA's decision to cut its official rate to2.0 per cent from 2.25, but then fell to A95.50c in the aftermath.
ANZ Bank senior foreign exchange strategist Sam Tuck said market expectations were for a stronger cross rate to result from the RBA cut, but the rate eased instead eased on market perceptions that the central bank had reached the end of its easing cycle.
At today's level, the cross rate is well short of its A99.79c post float high, reached on April 4.
Today's decision from the RBA means that there is now a 1.5 percentage point difference between the New Zealand's official cash rate 3.5 per cent official cash rate and the Australian equivalent.
It is the second such rate cut this year from the RBA as it seeks to soften the blow of a sharp decline in iron ore prices. The first was a 25 basis point cut to 2.25 per cent on February 4.
