The dollar cruised a little higher yesterday as central bank interest rate cuts in the US and New Zealand came in as expected.
It finished at 41.92USc after trading in a 41.85c-42.10c range. On Tuesday, it closed at 41.74USc
"We weren't expecting too much today," Daniel Swasbrook of Deutsche Bank said. "The Reserve Bank Monetary Policy Statement came out basically right on expectations so the kiwi really didn't move at all on the announcement. It really traded on the aussie."
The kiwi jumped about 10 basis points to 41.90USc immediately after the Reserve Bank announced it had lowered the official cash rate by 25 basis points to 5.75 per cent, but dealers said overall the reaction was subdued.
In a move perhaps more significant than the widely expected cut, Bank governor Don Brash cautioned the market not to expect any further cuts at the next review, in July.
The Federal Reserve's 50 point cut to 4 per cent shortly beforehand also had little impact. In contrast to Dr Brash's comments, the Fed indicated it was ready to cut rates further should the US economy remain sluggish.
Dr Brash said he made his decision before the Fed's announcement, and the only debate was on whether to leave the OCR unchanged, not on whether to make a larger cut.
WestpacTrust chief economist Adrian Orr, who has been calling for a more aggressive easing, said Dr Brash's statement "leaves the door ajar for future cuts, but not wide open."
- NZPA
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