The New Zealand dollar fell against all currencies today after Reserve Bank Governor Alan Bollard delivered a less hawkish statement than anticipated.
Dr Bollard left the Official Cash Rate unchanged, as expected in his six weekly review.
"It was read as not hawkish. That was the green light for the kiwi to drop," ANZ National Bank dealer Mark Elliott said.
The kiwi fell to US61.95c from its US62.60c opening and against yesterday's close of US62.40c.
Mr Elliott said that much of today's activity was cross-related with the kiwi-aussie and kiwi-euro heavily traded in a very active market.
Against the Australian dollar, the kiwi fell to A81.39c from A82.19c just before the announcement, while the euro cross fell to 0.4876 from 0.4929 before the statement and 0.4960 yesterday.
There were similar falls against other currencies.
The trade-weighted index ended on 62.10 from 62.86 yesterday.
Dr Bollard reiterated comments he did not expect to raise the OCR further in this cycle.
But a sustained period of adjustment in domestic spending was needed and "it will be some time before an easing in the OCR can be considered", he said.
ANZ National Bank chief economist Cameron Bagrie said that from the market's perspective "you haven't got the smoking gun to suggest a rate hike is back on the agenda".
"So the (bond) market has naturally rallied and the currency has come under a bit of pressure.
"The tenor of the statement is basically unchanged from June, which I think is the right assessment given recent economic developments."
Dealers said the neutral rate outlook contrasted with Australia where two more rate rises are expected following this week's poor inflation figure that pushed the annual CPI rate to 4.0 per cent.
"Interestingly the RBNZ is flagging a longer period of sustained economic weakness with subdued domestic spending which portends interest rates being kept high for a little bit longer than what they were saying in the June statement," Mr Bagrie said.
The US dollar steadied in Tokyo after falling sharply the previous session on a Federal Reserve survey that suggested the US economy may be slowing and interest rates could soon peak.
The Fed's beige book of economic activity "has boosted the view of no rate hike next month but I think the dollar will likely be range-bound until the Fed meets", said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.
The euro was nearly flat at US$1.2720, keeping the previous day's 1 per cent gain.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US61.99c US62.40c
NZ dlr/Aust dlr A81.39c A82.48c
NZ dlr/euro 0.4876 0.4960
NZ dlr/yen 72.07 73.06
NZ dlr/stg 33.42p 33.89p
NZ TWI 62.10 62.86
Australian dollar US76.15c US75.60c
Euro/US dollar US1.2719 US1.2580
US dollar/yen 116.26 117.07
- NZPA
<i>Currency:</i> NZ dollar slides against all currencies
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