The New Zealand dollar fell against the greenback and the Australian dollar on Friday after the Reserve Bank's interest rate review left traders with more of a sense that governor Graeme Wheeler is likely to cut the official cash rate at the next meeting in November.
The kiwi fell to 72.74USc at 5pm in Wellington from 73.29USc late yesterday. The local currency fell to 95.19Ac from 95.93Ac on Thursday.
RBNZ governor Wheeler kept the OCR at 2% last Thursday, saying more easing was on the cards to get inflation back within the target band of 1-3%. By contrast across the Tasman, Reserve Bank of Australia's Philip Lowe told politicians he was comfortable with where rates were at in his first public outing as governor, indicating less appetite to cut the cash rate further from 1.5%.
"We're seeing a lot of kiwi-Oz flows. There's a little bit of interest rate differential adjustment going on," said Alex Hill, head of corporate FX at NZForex. "The likelihood of a cut in November has increased."
Updates from the Australian and New Zealand central banks followed the Federal Reserve's latest policy review, with traders saying the US central bank maintained its position, keeping alive the prospects of an interest rate hike in December.
The New Zealand dollar headed for a weekly decline of 0.5% against the US dollar.
New Zealand's two-year swap rate fell one basis point to 2.01%, and 10-year swaps dropped three3 basis points to 2.5%.
The trade-weighted index declined to 77.20 from 77.78.
The kiwi fell to 4.8487 Chinese yuan from 4.8880 yuan and slipped to 64.92 euro cents from 65.19 cents. It fell to 55.75 British pence from 56.17 pence and was little changed at ¥73.49 from ¥73.46 .
(BusinessDesk)