Lower NZD is helping to insulate the New Zealand economy
Forex News

Lower NZD is helping to insulate the New Zealand economy

The Reserve Bank of New Zealand’s (RBNZ) Assistant Governor Christian Hawkesby set out the framework the Bank used to analyze the global economy and its influence on New Zealand in his latest speech.

Key quotes

The Reserve Bank lowered the Official Cash Rate by 75 basis points in 2019, due in part to the slowdown experienced by the country’s trading partners.

Lower NZD is helping to insulate the New Zealand economy

A number of short-to-medium-term risks to both the upside and downside.

Some upside risks to our terms of trade from limited dairy supplies.

How banks respond to final decisions of our capital review remains a key uncertainty.

A key uncertainty will be whether the NZD plays its role as a shock absorber.

Coronavirus is a human tragedy that has emerged that will need to monitor.

FX implications

With mostly mixed statements, without any clear direction of future RBNZ decision, the RBNZ policymaker failed to beat the market’s present risk-on sentiment that is currently helping the New Zealand dollar. The Kiwi pair initially surged to the intra-day high of 0.6548 after the release but is waiting for fresh clues around 0.6545 by the press time.

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