NZ Dollar Climbs After RBNZ Expands Stimulus; Retains Rate
The NZ dollar jumped against its major counterparts in the Asian
session on Wednesday, after the Reserve Bank of New Zealand
expanded its monetary stimulus and retained its interest rate to
stimulate the economy.
The Monetary Policy Committee decided to begin a Funding for
Lending Programme in December in order to reduce banks' funding
costs and lower interest rates.
The committee also decided to continue with the asset purchase
programme up to NZ$100 billion and to maintain the official cash
rate at 0.25 percent.
Policymakers viewed that economic activity since the August
monetary policy statement has proved more resilient that earlier
assumed. However, the Covid-19 shock to the economy is very large
and persistent, and inflation and employment will remain below the
remit targets for a prolonged period.
The MPC expects an ongoing increase in unemployment as the
economy adjusts. Consumer price inflation was also projected to
remain at the lower-end of the remit target range for a period, and
inflation expectations remain subdued.
Policymakers observed that the banking system is on track to be
operationally ready for negative interest rates by year end. The
committee agreed that it was prepared to lower the interest to
provide additional stimulus if required.
The kiwi climbed to 0.6904 against the greenback, its strongest
level since March 2019. The kiwi is seen locating resistance around
the 0.72 level.
After falling to 71.61 at 8:00 pm ET, the kiwi firmed to near a
10-month high of 72.58 against the yen. Next immediate resistance
for the kiwi is likely seen around the 74.00 level.
The kiwi firmed to near a 9-month high of 1.7136 against the
euro, up from a low of 1.7356 seen at 8:00 pm ET. If the kiwi
rallies further, 1.68 is seen as its next resistance level.
The kiwi appreciated to near a 2-week high of 1.0595 against the
aussie, following a 2-day decline to 1.0685 at 8:00 pm ET. The kiwi
may find resistance around the 1.03 level.