Dollar dips on plans for OCR

THE New Zealand dollar has plunged more than 1c against its United States counterpart to its lowest level in more than two years.

The Reserve Bank announced on Thursday it was looking at holding the interestdriving official cash rate (OCR) at 1.75%, and not just through to the end of 2019 but further out, into 2020.

By about noon yesterday the kiwi had fallen to US66.06c, its lowest since March 2016, and by 5pm yesterday sat at US66.07c.

For importers, households buying appliances and furniture and those buying foreign currency to head overseas, the plunge will hurt, while exporters’ products will be cheaper to buy.

Tourists visiting New Zealand will also get better value in buying local currency.

In keeping the OCR reined in for so long, the Reserve Bank signalled the economy may be headed for more sluggish growth than earlier anticipated.

While the Reserve Bank said on Thursday recent economic growth had moderated, governor Adrian Orr expected it to pick up pace during the rest of 2018 and be maintained through 2019. However, he also noted risks remained to the bank’s central forecast and the recent economic growth moderation could last longer.

Craigs Investment Partners broker Peter McIntyre said markets were ‘‘caught out a bit’’ by the Reserve Bank pushing out the OCR so far.