The New Zealand dollar extended its decline for a fourth consecutive session in Asian trading Wednesday, plunging to a five-year low against the U.S. dollar after the Reserve Bank of New Zealand (RBNZ) delivered a dovish policy decision. The central bank cut interest rates for the fifth straight meeting and issued cautious guidance, citing growing risks from global trade tensions and U.S. tariff policies.
The RBNZ’s commitment to maintaining accommodative monetary policy has significantly weakened the kiwi’s appeal among yield-seeking investors. Policymakers specifically highlighted concerns about how escalating U.S. tariffs could impact New Zealand’s export-driven economy, particularly its crucial agricultural sector. This warning amplified existing market worries about global trade flows and risk sentiment.
Technical indicators show the NZD/USD pair breaking through key support levels, with momentum suggesting potential for further downside. The currency’s sharp decline reflects both domestic policy divergence – as the Fed maintains its restrictive stance – and broader risk-off sentiment in currency markets. Traders will now focus on upcoming U.S. economic data and any developments in global trade negotiations that could influence the kiwi’s trajectory.
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