The New Zealand dollar fell against the yen. The Reserve Bank of New Zealand raised its policy rate by 0.25 percentage points to 2.75% at its second consecutive meeting, but gave no clear signal of further rate hikes. Market expectations that the interest-rate differential with the Bank of Japan will widen significantly are spreading less readily.
On 2 [date], the Reserve Bank of New Zealand announced that it had raised its policy rate by 0.25 percentage points to 2.75%. The hike marked the second consecutive meeting at which rates were raised, and the NZ dollar fell against the yen. The market found it difficult to discern any specific intention to raise rates further, curbing expectations of a short-term widening in the interest-rate differential.
Meanwhile, as the Bank of Japan signaled that it would maintain high yields, movements in the Japan-US interest-rate differential affected the NZ dollar. Yen buying and NZ dollar selling gathered pace, sending the NZ dollar lower against the yen.
Market participants are focused on the Reserve Bank of New Zealand’s statement and the outlook for monetary policy, and are sensitive to information about the possibility of further rate hikes and the pace of future increases. The focus will be on whether future releases and comments will spur renewed activity in the NZ dollar.