NZD Hits 13-Year Low as Divergence Between RBNZ and RBA Widens

The New Zealand dollar has hit a 13-year low against its Australian counterpart, NZD/AUD fell to a fresh 13-year low of 0.8095 before recovering to a little over 0.81.

According to Jason Wong, senior Markets Strategist at BNZ Markets, the divergence in policy stances between the RBNZ and RBA could lead to further weakness in the NZD/USD exchange rate.

The RBNZ's dovish hike last week has led to a relaxed attitude towards tightening policy to bring inflation down, with some MPC members seemingly more concerned about economic growth.

The market paid little attention to stronger-than-expected New Zealand business financial data, which lifted the Q2 GDP projection to 0.2% q/q, taking annual growth to a well-above-trend 2.4% y/y.