The New Zealand dollar was non-plussed by the Reserve Bank's surprise interest rate cut yesterday, although some movement was expected from offshore overnight.
The kiwi gained some ground against the greenback from yesterday's close, but moved very little on the day.
At 5pm the kiwi was at US41.13c from US40.97c yesterday, and the Australian dollar was at US49.50c from US49.62c.
The Reserve Bank yesterday cut the Official Cash Rate by half a percentage point to 5.25 per cent due to the United States crisis, trailing most central banks around the world except the Reserve Bank of Australia by about a day.
"We are making this unscheduled interest rate cut primarily because of recent tragic events in the United States," Reserve Bank governor Don Brash said.
"It seems more likely now that the current slowdown in the world economy will worsen. In these circumstances, New Zealand's short-term economic outlook would be adversely affected, although any downturn might well be relatively short-lived."
The US, European and Canadian rates were slashed on Monday followed by the Bank of England, Bank of Japan and Hong Kong central bank on Tuesday.
The RBA decided against cutting interest rates across the Tasman yesterday but has left the door open for a cut at its meeting on October 2. The key Australian interest rate remains at 4.75 per cent.
One local dealer said the RBNZ's rate cut had no impact on the spot kiwi rate at all.
"Generally it might take a while for the offshore market to digest it - we might see a bit of follow-through overnight but other than that its been a US41.00/25c range, it's been absolutely dead," he said.
"We've had a couple of people comment today, that it's just incredible the lack of movement you see in the kiwi-dollar on any of these announcements any more, unlike in the bad old days when it had a huge effect, but now nobody gives a toss. Spot kiwi is so far off the radar screen that even when people should care, they don't.
"There are bigger things going on, no-one's got any interest."
The Australian dollar bounced back a little but remained trapped below the US50c level, with little in the way of rescue in the offing.
Bank of New Zealand forex manager Greg Ball said the decision to cut rates when the RBA chose not to could see the kiwi dollar move to A84c from its current level around A83c within a week.
"As a result of that, the Australian dollar probably won't be looked on quite as favourably as the kiwi.
"We think that any capital flows that come down under may swing in the way of the New Zealand dollar," Mr Ball said.
The kiwi jumped to A83.11c from A83.01c within moments of the RB's announcement, where it remained at the close of the Wellington session.
On the other crosses at 5pm the kiwi traded at 48.45 yen (48.32 at Tuesday's close), 0.2809 pence (0.2798), 0.8693 marks (0.8703), 0.6582 Swiss francs (0.6605) and 0.4445 euros (0.4450).
The Australian dollar was buying around $NZ1.2029 ($NZ1.2113).
The trade-weighted index was at 48.55 (48.39), 90-day bill yields were at 5.33 percent (5.66 percent) and the monetary conditions index was at minus 977 (minus 960).
Bonds rallied following this yesterdays announcement with yields falling sharply across the board.
The March 2002s were at 5.18 percent (5.41 percent), the April 2004s were at 5.57 percent (5.72 percent), the November 2006s were at 6.10 percent (6.17 percent), and the November 2011s were at 6.52 percent (6.54 percent).
- NZPA
<i>Currency:</i> Kiwi unmoved by surprise rate cut
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