The New Zealand dollar fell to a three-week low against the pound after Bank of England governor Mark Carney signalled it may be necessary to remove some of the bank's monetary stimulus, suggesting interest rates could be raised as British economic growth picks up.
The kiwi dropped to 56.50 British pence as at 8am in Wellington, and earlier touched 56.16 pence, from 56.77 pence late yesterday. It traded at 73.09 US cents, up from 72.76 cents yesterday.
Carney told a European Central Bank conference in Portugal that "some removal of monetary stimulus is likely to become necessary" with a return to more conventional policy decisions.
The comments come after the BoE's policy committee was split this month on whether to begin raising interest rates from a record-low 0.25 per cent, with those voting to stay put pipping the rate hikers by five to three. The kiwi recovered some ground against the euro after the ECB indicated president Mario Draghi hadn't intended to send any hawkish signals to the market in his comments in Portugal.
"Markets are sensing a coordinated effort by central bank heads to give the message that global monetary policy is close to an inflexion point and economies can handle some removal of monetary accommodation," said Jason Wong, currency strategist at Bank of New Zealand, in a note.
