The New Zealand dollar — also known as the kiwi — was getting crushed on Wednesday afternoon after the Reserve Bank of New Zealand elected to keep interest rates unchanged.
The key passage, however, was further commentary from the RBNZ that it believes further depreciation in the kiwi would be appropriate.
The kiwi fell to as low as $0.6424 against the dollar in afternoon trade on Wednesday.
“In recent weeks there has been some easing in financial conditions, as the New Zealand dollar exchange rate and market interest rates have declined,” the RBNZ said.
“A further depreciation in the exchange rate is appropriate given the ongoing weakness in export prices.”
The RBNZ’s statement also followed the latest announcement from the Federal Reserve that it would keep interest rates unchanged.
Like the Fed, the RBNZ also made reference to global markets saying, “There are many risks around the outlook. These relate to the prospects for global growth, particularly around China, global financial market conditions, dairy prices, net immigration, and pressures in the housing market.”
The Fed’s language was a bit more sanguine, with the Fed saying, “The Committee is closely monitoring global economic and financial developments and is assessing their implications for the labour market and inflation, and for the balance of risks to the outlook.”
Here’s the kiwi, getting slammed.