New Zealand: Dovish RBNZ comments reinforce kiwi sell-off – MUFG

The New Zealand dollar has been the worst performing G10 currency amidst more risk off trading conditions overnight which has resulted in the NZD/USD rate falling back below the 0.6000-level, economists at MUFG Bank report.

Key quotes

“The kiwi has been hit more specifically by dovish comments from RBNZ Governor Adrian Orr. He stated that the RBNZ will be thinking about the need for additional stimulus at its May review.” 

“The RBNZ’s next policy meeting takes place on the 13th May. Governor Orr stated that negative rates are not ruled out but ‘aren’t the best tool we have’ for the current situation. Orr sees negative rates as best for a low, long economic contraction.”

“The Governor believes that QE is a far more effective and efficient tool for dealing with the sharper shock from COVID-19, and left open the possibility that the QE programme could be extended further. He even said he was open minded on direct monetization of government debt.”