- NZD/USD drops by more than 50 pips in Asia as RBNZ’s governor talks about direct debt monetization.
- Orr also said the bank could boost stimulus in May.
- President Trump banned immigration to the US in order to contain the virus outbreak.
The New Zealand dollar is on the offer on Tuesday with the nation’s central bank head expressing openness to direct debt monetization.
The NZD/USD pair is currently trading at session lows near 0.5978, representing a 0.91% drop on the day, having faced rejection at 0.6045 early Monday.
Reserve Bank of New Zealand’s governor Orr was out on the wires about 30 minutes ago stating that the central bank is open to direct debt monetization, that is, willing to purchase bonds directly from the government instead of buying them from markets, as they usually do.
Orr also said that the central bank may think of adding more stimulus in May. NZD/USD ran into bids near 0.6050 following Orr’s comments.
The central bank launched a quantitative easing program in March in order to contain the economic fallout from the coronavirus outbreak and the resulting financial market instability.
Apart from Orr’s dovish talk, the pair may be feeling the pull of gravity due to President Trump’s decision to suspend immigration into the US. “In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States,” Trump tweeted 15 minutes ago.
Also, the broader market sentiment has turned pro-safe haven due to the oil price crash. WTI, the US benchmark, fell below zero on Monday due to oversupply concerns.