The Kiwi is falling. Overview for 06.10.2021

NZDUSD is being sold after the RBNZ meeting. 

The New Zealand Dollar is falling against the USD. The current quote for the instrument is 0.6880.

During its October meeting, the Reserve Bank of Australia decided to raise the benchmark interest rate for the first time in 7 years, from 0.25% to 0.50%, just as expected.

In the comments, the regulator said that the New Zealand economy was quickly recovering after being weakened by coronavirus-related social restrictions. Based on this, the RBNZ is planning to continue tightening its monetary policy and today’s rate hike was just the first step. Investors believe that the stimulus program may also be decreased soon. 

The RBNZ also said that prospects for inflation and employment didn’t change because of the current COVID-19 restrictions. Still, the regulator admitted that the presume of manufacturing and production facilities remained rather significant.

There are certain risks in the strategy of tightening the monetary policy in New Zealand, which are connected to the pandemic and its next wave. It might pause the entire cycle but everything depends on real conditions.