OCR forecasts lead to NZD fall

The NZ dollar fell against the greenback and the Australian dollar 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 US72.74 cents at 5pm yesterday from US73.29c late Thursday. The local currency fell to A95.19c from A95.93c on Thursday.

RBNZ governor Wheeler kept the OCR at 2 per cent on Thursday, saying more easing was on the cards to get inflation back within the target band of 1- 3 per cent. By contrast across the Tasman, Reserve Bank of Australia’s Philip Lowe on Thursday told politicians he was comfortable with where rates were in his first public outing as governor, indicating less appetite to cut the cash rate further from 1.5 per cent.

“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 RBNZ and RBA 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 NZ dollar is heading for a weekly decline of 0.5 per cent against the US dollar.

The kiwi fell to 4.8487 Chinese yuan from 4.8880 yuan and slipped to 64.92c from

65.19c. It fell to 55.75 British pence from 56.17p and was little changed at ¥ 73.49 from ¥ 73.46 yen.