You are using an older browser version. Please use a supported version for the best MSN experience.

Kiwi steady following rate cut tip

NZ NewswireNZ Newswire 21/07/2016 Paul McBeth

The New Zealand dollar is little changed below US70 cents after the Reserve Bank signalled rate cuts were needed to drag down a strong currency.

The kiwi traded at US69.95c at 8am on Friday in Wellington from US69.88c late on Thursday. The trade-weighted index was almost unchanged at 75 from 74.97.

Traders are pricing in about a 94 per cent chance governor Graeme Wheeler will cut the official cash rate to 2 per cent next month after the Reserve Bank on Thursday said more easing was likely with the currency above the bank's expectations, making it difficult to meet the mandated target of keeping annual inflation between 1 percent and 3 per cent.

The consumers price index has been below the bottom of the band for seven quarters.

"If the recent decline is to be sustained, the bank will need to deliver two more OCR cuts in the not too distant future (given this is now priced)," BNZ senior market strategist Kymberly Martin said in a note.

"Further downside to the NZD will likely need to be driven by global forces."

The kiwi dropped to 73.97 yen from 74.84 yen on Thursday after Bank of Japan governor Haruhiko Kuroda ruled out 'helicopter money' - where a central bank buys perpetual bonds with no maturity date - as a means to stir inflation in the world's third-biggest economy.

On Friday morning, the local currency was little changed at 63.43 euro cents from 63.34c after the European Central Bank left monetary policy unchanged, and president Mario Draghi said he was still willing and ready to act in response to the UK's vote to leave the European Union if need be. The kiwi traded at 52.96 British pence from 52.80p.

The kiwi was almost unchanged at 93.29 Australian cents from A93.30c and edged up to 4.6694 Chinese yuan from 4.6620 yuan.

image beaconimage beaconimage beacon