The New Zealand dollar plummeted today following the monetary policy announcement of the Reserve Bank of New Zealand released by the end of yesterday’s trading session. While the central bank left its monetary policy unchanged, the statement was more dovish than market participants had expected.
The RBNZ left its main interest rate at 1.75%, in line with market expectations. Yet the statement by Governor Adrian Orr was surprisingly dovish, saying that it will take longer for the central bank to start raising interest rates than it was previously expected:
We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement.
Furthermore, the Governor did not rule out the possibility of a rate cut:
The direction of our next OCR move could be up or down.
The economic projections of the RBNZ demonstrated in the Monetary Policy Statement were not particularly optimistic either as the forecast of economic growth in this year and the next was revised lower, though the forecast for the next couple of years got a positive revision. Inflation projections remained without change.
NZD/USD plunged from 0.6743 to 0.6655 as of 10:25 GMT today, and its daily low of 0.6641 was the lowest since March 2016. EUR/NZD soared from 1.7159 to 1.7433, and its daily high of 1.7442 was the highest since December 2017. NZD/JPY slumped from 74.80 to 73.94, touching 73.79 intraday — the lowest level since November 2016.