Traders fear RBNZ intervention
NZD/USD fell to the lowest levels since the end of February in the $0.8285 area. Kiwi slipped after Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, said the price of whole milk powder fell to the lowest since July 2012.
Moreover, the decline of New Zealand’s dollar since July was caused by comments of the Reserve Bank of New Zealand Governor Graeme Wheeler who said back then that NZD’s strength was “unjustified” and risked hurting the economy. The RBNZ put the further interest-rate increases on hold after it became in March the first major central banker to lift borrowing costs in 3 years.
Traders now think that the RBNZ may intervene at the currency market. Speculation that officials intervened intensified as the kiwi dropped on Aug. 25. Unlike last year, officials haven’t confirmed this time that they sought to weaken the currency.
Analysts at ANZ point out that in such situation traders will less likely try to buy NZD on the potential bottom for fear that there are some big sellers at the market.