The New Zealand dollar, affectionately known as the “kiwi,” is getting crushed in late trade on Wednesday after the Reserve Bank of New Zealand said the kiwi’s current level is “unjustified and unsustainable.”
In its latest policy announcement, the RBNZ said:
“Lower commodity prices and increased global financial market volatility have taken some pressure off the New Zealand dollar. However, its current level remains unjustified and unsustainable and continues to constrain growth in the tradables sector. We expect a further significant depreciation.”
This last sentence is the one that really got the kiwi moving lower, as the RBNZ made clear it wants the kiwi to fall.
The RBNZ also kept its benchmark interest rate unchanged at 3.5%, which was in-line with the market’s expectations.
Near 5:00 pm ET on Wednesday, the kiwi was trading below 0.78 against the dollar, down from around 0.795 earlier in the day.
The kiwi weakened significantly against the dollar after the Fed’s announcement that it would end its QE program this month, and legged lower following the RBNZ’s announcement.
So, all in all, the not the biggest monetary policy announcement of the day, but this kind of stuff pings around world markets and is worth taking note of.
Here’s the drop in the kiwi today.