The New Zealand dollar tumbled after the Reserve Bank of New Zealand kept its policy rate unchanged at 2.75%, defying forecasts for a 25 basis point hike. The kiwi fell 1.7% against the US dollar and 1.9% against the Australian dollar, its steepest intraday drop versus the Aussie since October 2017.
Analysts said the surprise decision intensified pressure on the already weak local currency, which faces a soft economy and election uncertainty. Glenn Yin of ACCM Prime warned the kiwi could test 50 US cents if it breaches 55 US cents, a 17-year low.
The central bank's hold suggests persistent inflation concerns remain, while market expectations for a rate rise were widespread among traders and economists.
New Zealand dollar, 1.7%, 1.9%, 2.75%, Glenn Yin
Source: Bloomberg Markets · Summarized by HeadlinesBriefing