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THE TAKEAWAY: The New Zealand Dollar slumped early in Asian trade as the Governor of the Reserve Bank of New Zealand Graeme Wheeler said that the bank had intervened in the currency.
The New Zealand Dollar declined slightly as the Reserve Bank of New Zealand’s Governor Graeme Wheeler began his speech at the Select Committee hearing in Wellington. Initial downward movements in the currency were caused by comments made by Wheeler hinting that the Bank could cut rates if house price risks were removed. The large move on the downside however, came after Wheeler announced that the RBNZ had intervened in the currency and sold so called ‘Kiwi Dollars’ during the last month.
Globally, Central Banks are participating in currency intervention, and after the RBA cut the overnight cash rate to 2.75 per cent, the RBNZ become the latest participants in the so called ‘currency war’. Governor Wheeler said that the selling occurred during the last month and that the Bank was capable of further intervention. The currency fell as much as 1.2 per cent against the U.S. Dollar before profit taking saw the Kiwi recover to a loss of -0.9 per cent.