NZ dollar holds post-OCR cut gains

  • 24/07/2015
NZ dollar holds post-OCR cut gains

By Tina Morrison

The New Zealand dollar has held onto some of its gains after the Reserve Bank cut the benchmark interest rate and toned down its call for more falls in the currency.

The kiwi was trading at US66.10 cents at 8am on Friday in Wellington, from US66.29c at 5pm on Thursday.

That was up from the US65.65c before the bank's interest rate decision on Thursday morning.

The trade-weighted index was at 70.36 at 8am from 70.50 on Thursday afternoon and 69.98 before the rate decision.

Reserve Bank governor Graeme Wheeler cut the official cash rate to 3 percent on the prospect of slowing growth and low inflation.

"The New Zealand dollar held onto its post RBNZ gains," Kathy Lien, managing director of FX strategy for BK Asset Management in New York said in a note.

"Ultimately we expect NZD/USD to trade lower because the central bank could still lower rates."

Traders are pricing in a 94 percent chance the central bank will reduce the benchmark again at its next meeting in September, according to the overnight interest swap curve.

In New Zealand on Friday, trade data for June is published at 10.45am. The country's trade surplus is expected to shrink to $100 million in June, from $350m in May reflecting weaker dairy exports, according to a Reuters poll of economists.

The Reserve Bank is scheduled to release data on high debt mortgage lending at 3pm.

On Friday morning, the New Zealand dollar was little changed at 89.82 Australian cents from A89.85c, slipped to 81.83 yen from 82.20 yen, and fell to 60.11 euro cents from 60.58 cents.

The local currency rose to 42.58 British pence from 42.42p yesterday after UK retail sales for June missed expectations.

NZN