New Zealand dollar continued its slide against its US counterpart on Thursday after Reserve Bank of New Zealand introduced no change in the base interest rate.
NZD/USD pair slid to a session low at 0.7894 during Asian trade, after which consolidation followed at 0.7910. Support was expected at June 10th low, 0.7836, while resistance was to be met at June 7th high, 0.8016.
Earlier on Thursday, RBNZ announced its decision to leave the base interest rate at record low of 2.5% and keep this course by the end of this year. Concerns appeared that national currency was still overvalued and additional demand for the kiwi, as the New Zealand dollar is often called, needed to be avoided. RBNZ revised down its growth forecast, regarding the year until March 2014, to 3%, as previously it was 3.3%. The bank projected a growth of 2.8% this year. Experts from the central bank also stressed that housing market boom posed a threat to financial stability along with the rising value of the national currency, which could obstruct export. However, some traders expressed their expectations that the central bank of New Zealand will raise interest rates early in 2014.
“Given this outlook, we expect to keep the OCR (official cash rate) unchanged through the end of the year,” Governor Graeme Wheeler said.
On Wednesday industrial data showed that house price inflation in New Zealand rose by 0.7% in May, after a 0.8% increase during the previous month.
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