The New Zealand dollar recovered slightly. Photo / Getty Images
The New Zealand dollar gained after China's central bank on Friday said it would cut the amount of cash that banks are required to hold, freeing up liquidity for the economy.
The kiwi was trading at 64.22 US cents at 7:45am in Wellington from 63.82 US cents at 5pm Friday
in Wellington and 64.25 US cents late Friday in New York. The trade-weighted index was at 71.42 points from 71.44 Friday in New York.
The People's Bank of China lowered the required reserve ratio for financial institutions by 0.5 percentage points as of Sep. 16, "aiming to further support the development of the real economy and lower financing costs," it said on its web site. It also said rural commercial banks operating solely within provincial administrative regions will have a targeted cut of 1 percentage point in the required reserve ratio. The reduction will be implemented on Oct.15 and Nov. 15, with a cut of 0.5 percentage points each time.
According to Bloomberg, the cuts will release US$126 billion of liquidity.
That "pulling of the monetary stimulus lever" in China saw the kiwi well supported, said Kiwibank FX trader Mike Shirley. The kiwi also benefited when US jobs data came in lower than expectations and when Federal Reserve chairman Jerome Powell reiterated in a speech in Zurich on Friday that the Fed will "act as appropriate" to sustain the country's economic expansion.
