The New Zealand dollar declined as the Federal Reserve gave an assessment of US economic growth that was in line with expectations, keeping open the prospect of another hike to US interest rates in June.
The kiwi fell to 68.76 US cents as at 8am in Wellington from 69.48 cents late yesterday. The trade-weighted index dropped to 74.88 from 75.37.
The Federal Open Market Committee downplayed signs of weakness in the US economy this year, saying it "views the slowing in growth during the first quarter as likely to be transitory" while inflation was running close to its target and consumption "remained solid".
Investors took the statement as a sign the Fed is on track for the two rate hikes it has flagged this year, having increased the fed funds rate to a range of 0.75 per cent to 1 per cent in March.
"Overall, the statement leaves the impression that nothing significant has really changed and the path of gradual tightening remains in play," said Jason Wong, currency strategist at Bank of New Zealand, in a note. "The USD and US rates were slightly higher after the statement, with nothing to change the consensus view that the Fed is likely to hike again next month, subject to the data flow over the next six weeks."
