The New Zealand dollar extended its slide from yesterday when Reserve Bank governor Graeme Wheeler outlined possible responses to a high kiwi and traders latched onto his use of the word intervention.
The kiwi did not move much after the release of Federal Reserve minutes.
It fell to 83.53 US cents from 84.08 cents at 5pm in Wellington yesterday. It was at 84.58 cents before Mr Wheeler's speech notes were released. The trade-weighted index was at 76.27 from 76.33.
Mr Wheeler told the New Zealand Manufacturers' and Exporters' Association the kiwi is significantly over-valued, and he "will intervene when the circumstances are right". That was enough to spark a sell-off in the currency as the word intervention got flashed across trader screens.
Minutes of the Federal Open Market Committee's last meeting showed members favoured varying the Fed's monthly bond purchases.
"Everyone latched onto certain parts of [Wheeler's] speech regarding intervention," says Dan Bell, currency strategist at HiFX. "I think the market has over-reacted. He outlines a number of measures that could be used but this was more of an academic position than a policy position."
The kiwi may trade in a range of 83.20 US cents to 84 cents today.
Mr Bell says while the minutes of the Fed meeting show there are differences of opinion between voting members, "I don't think that was news to many people. At the moment policy response continues to sit within the more dovish camp".
The kiwi rose to 54.80 British pence from 54.43 pence and rose to 62.82 euro cents from 62.67 cents.
It climbed to 81.32 Australian cents from 81.14 cents and fell to 78.34 yen from 78.54 yen.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- MARKET CLOSE: NZ shares fall with profit taking on Spark, Freightways, SkyCity
- Space – New Zealand’s frontier?
- Three companies meet crowdfunding targets
- NZ dollar gains as US interest rate track weighed before Yellen testimony
- IRD eyes hybrid instruments, related party debt in global tax avoidance clamp-down
Most listened to
- How might the government best encourage NZ space industry? Helmore Ayers Lawyers consultant lawyer Dr Maria Pozza explains
- Forsyth Barr's Matthew Leach on why he expects Xero to drop from the NZX 10 index
- Education consultant Sharndre Kushor says Crimson Consulting’s new website is the “Netflix for educational achievement”
- Nathan Smith breaks down the latest foreign affairs news
- NZIER's Kirden Lees and Rob Hosking discuss changing how the Reserve Bank targets interest rates