New Zealand Dollar Gets Lift as RBNZ Less Dovish Than Expected

 
  By Rebecca Howard 
 

        WELLINGTON, New Zealand--The New Zealand dollar Thursday rose against the greenback, shrugging off an interest-rate cut as comments by the central bank were less dovish than the market had expected.
        The New Zealand dollar was at US$0.6629 in late Wellington trading, compared with US$0.6620 late Wednesday. It ticked up as high as US$0.6654 right after the rate decision. The New Zealand dollar was at A$0.8989 versus A$0.8920 previously.
        The Kiwi got a lift despite the fact that the central bank cut the rate by 25 basis points to 3.00% and signaled more easing to come.
        "A reduction in the official cash rate is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely," said Reserve Bank of New Zealand Gov. Graeme Wheeler.
        All 16 economists polled by The Wall Street Journal anticipated that the central bank would cut the benchmark cash-rate target on Thursday to at least 3%, however, several had said 50 basis points was also possible.
        "The RBNZ was less dovish than people had feared but to be fair they ticked every box they were supposed to," said Western Union Business Solutions Corporate Dealing Manger Chris Hunter. It jawboned the Kiwi lower and left the "door well and truly open" to further easing and "of course they cut the rate, which is the important thing," he said.
        The central bank also modified its language around the Kiwi, which may have contributed to its strength. Mr. Wheeler noted that the New Zealand dollar has "declined significantly" since April, which is helping to ease monetary conditions. However, he dropped the use of the words "unjustified and unsustainable" but rather said "further depreciation is necessary given the weakness in export commodity prices."
        "Where the statement might be slightly disappointing for the doves is that there is some wavering in the commitment to jawbone NZD," said Ben Jarman, economist at JP Morgan.
        Write to Rebecca Howard at rebecca.howard@wsj.com; @FarroHoward
        (END) Dow Jones Newswires

        July 23, 2015 01:04 ET (05:04 GMT)

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