NZ Dollar Falls As RBNZ Cuts Key Rate By 50 Bps

(RTTNews) - The New Zealand dollar weakened against most major currencies in the Asian session on Wednesday, after the Reserve Bank of New Zealand slashed its benchmark rate by 50 basis points, as inflation is converging to the target midpoint, while economic growth is expected to remain subdued in the near term amid restrictive monetary policy.

The Monetary Policy Committee led by Governor Adrian Orr, decided to reduce the Official Cash Rate to 4.75 percent from 5.25 percent. The outcome of the meeting matched expectations.

Previously, the bank had reduced the interest rate by 25 basis points in August, which was the first cut since March 2020.

Traders are cautious ahead of the release of key U.S. inflation data and the Fed's latest meeting minutes later in the week for additional clues on the Fed's interest rate trajectory. They also look to pick up stocks at a bargain after the steep drop recently.

Middle East worries persisted and China's state planner announced no new plans for major stimulus after a highly anticipated announcement on plans to boost the country's ailing economy fell short of market expectations.

The lack of concrete measures in China disappointed markets, given the numerous headwinds, from a prolonged housing crisis to sluggish consumption and local government debt.

In the Asian trading today, the NZ dollar fell to nearly a 2-month low of 0.6076 against the U.S. dollar and more than a 1-1/2-month low of 1.8049 against the euro, from Tuesday's closing quotes of 0.6138 and 1.7883, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.59 against the greenback and 1.81 against the euro.

Against the yen, the kiwi edged down to 90.12 from yesterday's closing value of 90.96. The kiwi may test support near the 87.00 region.

Looking ahead, U.S. MBA weekly mortgage approvals and EIA crude oil data are due to be released.