The New Zealand dollar plunged against its major trading partners in the Asian session on Monday, after the Reserve Bank of New Zealand announced an emergency cut and signaled willingness to provide further stimulus to counter the economic impact of the coronavirus crisis.
New Zealand’s central bank slashed its benchmark interest rate by 75 basis points to 0.25 percent and pledged to leave it there for at least the next 12 months.
The negative economic implications of the COVID-19 virus continue to rise warranting further monetary stimulus, the bank said in a statement.
The bank also said that it is ready to undertake large-scale purchases of government bonds if needed.
This followed a rate cut by the Federal Reserve to almost zero in another emergency move to shore up the world’s largest economy.
The Fed also unveiled a massive asset-buying program worth $700 billion to support the economy from the effects of the virus.
The kiwi showed mixed performance against its major peers on Friday. While it rose against the aussie and the yen, it fell against the greenback and the euro.
The kiwi tumbled 1.2 percent to 0.5990 against the greenback, its lowest level since May 2009. The pair had closed last week’s deals at 0.6066. Immediate support for the kiwi is likely seen around the 0.57 level.
The kiwi slid 2.9 percent against the yen, touching a 1-week low of 63.63. At Friday’s close, the pair was worth 65.51. Should the kiwi falls further, it is likely to test support around the 62.00 region.
The Bank of Japan enhanced its massive monetary policy easing, in addition to coordinated measures with other leading central banks, to tackle the financial market downturn caused by the concerns over coronavirus outbreak.
The policy board has decided to loosen the monetary policy through conducting various operations including purchases of Japanese government bonds and the US dollar funds-supplying operations.
The kiwi was down against the euro at a 1-week low of 1.8594. The euro-kiwi pair was quoted at 1.8297 at Friday’s close. Further fall in the currency may challenge support around the 1.90 level.
After falling to a 4-day low of 1.0308 against the aussie following the decision, the kiwi reversed direction and appreciated to a 5-year peak of 1.0122. The kiwi had finished Friday’s trading session at 1.0193 against the aussie. Next key resistance for the kiwi is likely seen around the 1.00 level.
Looking ahead, New York Fed’s empire manufacturing survey for March and Canada existing home sales for February are due out in the New York session.