Market players are selling NZDUSD after the Reserve Bank of New Zealand decided to tighten its monetary policy.
The “kiwi” is plunging against the USD. The current quote for the instrument is 0.6918.
During its November meeting, the Reserve Bank of New Zealand decided to raise the benchmark interest rate from 0.5% to 0.75%, just as expected. It’s been the second rate hike in a row.
The regulator’s strategy to tighten the monetary policy amid the removal of coronavirus-related restrictions is pretty fast and aggressive. The current state of the New Zealand economy does allow to raise the rate, but further monetary steps should be put on hold. It will take the RBNZ several months to analyse the situation and monitor its macroeconomic parameters in order to continue tightening the policy.
The “kiwi” is responding not only to the rate hike, because it was expected. The national currency is pressured by the strong USD, which remains quite aggressive on the global currency market.
After the previous rate hike the month before, the “kiwi” recovered pretty fast.