The New Zealand dollar rose to a two-month high against the Australian dollar after the Reserve Bank of Australia lowered its forecast inflation track, adding to a case for a further interest rate cut across the Tasman.
The New Zealand dollar rose to 92.68 Australian cents and earlier touched 92.81 cents the highest since early March apart from a brief spike on Tuesday when the RBA cut its cash rate to 1.75 percent.
The kiwi fell to 68.54 US cents, dragged lower by a drop in the Aussie dollar, from 69.02 cents yesterday. The RBA today released its monetary policy statement, showing the forecasts and assumptions that prompted this week's rate cut.
Australia's consumer price index fell 0.2 percent in the first quarter, the biggest quarterly decline since December 2008, for a smaller-than-expected annual gain of 1.3 percent.
Today's RBA statement forecasts underlying inflation of between 1 and 2 percent in 2016, meaning it won't move back within its target range 2-to-3 percent as it had previously expected.