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Kiwi Sinks to Lowest Level Since February On RBNZ Rate Statement

ByORBEX
Published 09/11/2014, 02:53 AM
Updated 08/29/2019, 07:20 AM
NZD/USD
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DX
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The New Zealand Dollar declined sharply this morning to hit a new recent low at the 0.8181 level, which was its lowest level seen since early February against the USD. Technical analysts noted that NZD/USD remains within the parallel falling trendlines of a medium term declining channel and that its decline has enough momentum to continue.

One of the key fundamental factors traders cited in pushing the Kiwi lower was yesterday’s RBNZ Rate Decision in which the central bank left rates unchanged at the 3.50 percent level.

Although this was in line with the market’s monetary policy expectations, Reserve Bank Governor Graeme Wheeler noted in the associated RBNZ Rate Statement that, “The high exchange rate continues to restrain growth in the traded sectors”.

The rate statement went on to add that, “The exchange rate has yet to adjust materially to the lower commodity prices. Its current level remains unjustified and unsustainable. We expect a further significant depreciation, which should be reinforced as monetary policy in the US begins to normalise.”

The central bank also expected “further policy tightening will be necessary”, and it observed that much of New Zealand’s recent growth was coming from strong net immigration to the country, stating that, “A high level of net immigration is adding to domestic demand as well as productive capacity.”

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