Kiwi Crashes After RBNZ Hikes Rate by 25 Basis Points

The Reserve Bank of New Zealand (RBNZ) lifted its official cash rate by 25 basis points to 2.75% in a unanimous decision, matching market expectations.

The move sparked a sharp selloff in the New Zealand dollar against the US dollar, with NZD/USD falling almost 1.7% from near 0.5900 to around 0.5800 before recovering towards 0.5850, where it sat on its 200-day Exponential Moving Average (EMA).

The RBNZ's decision was seen as a disappointment by investors, who had previously priced in nearly 95 basis points of further tightening through next year.

This adjustment played out over roughly 90 minutes, leaving the Kiwi the weakest major currency from the Tokyo open.