New Zealand dollar lower on interest rate hike

New Zealand dollar lower on interest rate hike

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The New Zealand dollar declined on Thursday after the Reserve Bank of New Zealand decided to raise interest rates there by 25 basis points to 7.75 percent. Despite the rate hike, comments from the Bank did not include any references to further economic tightening. This was the first time recently that such comments were omitted from Bank remarks, raising hopes that the current increase might be the last for awhile. The New Zealand currency was 1.2 percent lower to $0.7380 in relation to the US dollar, while it dropped 0.6 percent to ¥88.00 against the Japanese yen.

The yen also weakened as investors again began using the Japanese currency to finance risky carry trades. The Japanese currency reached a new low versus the euro, falling 0.3 percent to ¥162.30. The yen was also down in relation to sterling, dropping 0.1 percent to ¥237.60, while it lost 0.6 percent to ¥119.30 against the greenback.

The US dollar was stronger as it added 0.3 percent to $1.3600 against the euro, gained 0.3 percent to SFr1.2080 versus the Swiss franc, and was up 0.5 percent to $1.9920 against sterling.