Aussie dollar plummets to 10-year low

Aussie dollar plummets to 10-year low

It's worth mentioning that the Kiwi slumped to the lowest since January 2016 on Wednesday after the RBNZ announced a huge 0.50% rate cut and the Governor raised possibilities of further cuts, negative rates during his press conference. "Committee members were more concerned about global growth headwinds and the potential impact on the New Zealand economy via the trade channel".

"The monetary policy committee was of the view that a 25 basis-point rate cut was inadequate due to evolving global economic conditions, while a 50 basis-point cut would be excessive", RBI Governor Shaktikanta Das told reporters.

"The RMB (Renminbi) is trading slightly weaker thus far today, but we believe the combination of central bank easing and PBoC (People's Bank of China) efforts to slow the pace of RMB depreciation are keeping risk assets buoyant", Stephen Gallo, an analyst at BMO Capital Markets said. "In the absence of additional monetary stimulus, employment and inflation would likely ease relative to our targets", the statement said.

"We are in an environment where unemployment is low, we see wages are increasing and this cut will ultimately mean New Zealanders should face lower interest rates", she said.

New Zealand's central bank reduced its key rate by 50 basis points to underpin economic growth and revive inflation.

At the time of writing the GBP/NZD exchange rate has rocketed up by a whopping 2% this morning propelling the pairing to a one-month high of NZ$1.9060.

New Zealand's economy relies on the country selling agricultural goods overseas, in particular milk powder to China, and on tourism.

In New Zealand, low interest rates and increased government spending will support a pick-up in demand over the coming year.

The Australian dollar has plummeted below 67 USA cents for the first time in 10 years after New Zealand unexpectedly slashed interest rates.

"We believe our new lower rates provide a fair and considered outcome for borrowers while also balancing the needs of our savings customers".

In response, traders ratcheted up bets on the neighboring Reserve Bank of Australia cutting its own rates in September, with swaps shifting to price in a 70% chance of a cut, from 45%. Orr signaled further easing could be possible and even hinted at non-conventional policy as the global outlook darkens amid a worsening economic conflict between the US and China. He said the rate cut was a "dramatic warning".

The Japanese currency rose 0.2% to 106.27, although that was still some way from levels seen on Monday when the escalating U.S.

Some economists, however, had started calling for a rate cut after several central banks, including the Fed, eased policy in recent weeks to stimulate economic growth.

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