The NZ dollar jumped against its major counterparts in the Asian session on Wednesday, after the Reserve Bank of New Zealand expanded its monetary stimulus and retained its interest rate to stimulate the economy.
The Monetary Policy Committee decided to begin a Funding for Lending Programme in December in order to reduce banks’ funding costs and lower interest rates.
The committee also decided to continue with the asset purchase programme up to NZ$100 billion and to maintain the official cash rate at 0.25 percent.
Policymakers viewed that economic activity since the August monetary policy statement has proved more resilient that earlier assumed. However, the Covid-19 shock to the economy is very large and persistent, and inflation and employment will remain below the remit targets for a prolonged period.
The MPC expects an ongoing increase in unemployment as the economy adjusts. Consumer price inflation was also projected to remain at the lower-end of the remit target range for a period, and inflation expectations remain subdued.
Policymakers observed that the banking system is on track to be operationally ready for negative interest rates by year end. The committee agreed that it was prepared to lower the interest to provide additional stimulus if required.
The kiwi climbed to 0.6904 against the greenback, its strongest level since March 2019. The kiwi is seen locating resistance around the 0.72 level.
After falling to 71.61 at 8:00 pm ET, the kiwi firmed to near a 10-month high of 72.58 against the yen. Next immediate resistance for the kiwi is likely seen around the 74.00 level.
The kiwi firmed to near a 9-month high of 1.7136 against the euro, up from a low of 1.7356 seen at 8:00 pm ET. If the kiwi rallies further, 1.68 is seen as its next resistance level.
The kiwi appreciated to near a 2-week high of 1.0595 against the aussie, following a 2-day decline to 1.0685 at 8:00 pm ET. The kiwi may find resistance around the 1.03 level.
The material has been provided by InstaForex Company – www.instaforex.com
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