NZD Weakens As RBNZ Tells Banks To Prepare For Negative Rates

5/13/2020 01:03:00 PM (GMT+6)
  • During today's Asia-Pacific session, uncertainty over the coronavirus outbreak put pressure on the risk again, and Republican senators proposed legislation that would give President Trump the power to impose sanctions on China if not provided. Complete accounting for coronavirus outbreaks.
  • The RBNZ kept the OCR unchanged at 0.25% and announced an increase in QE to NZ$60 billion from NZ$33 billion as expected. However, the RBNZ also stated it's aiming for a 'least regrets' monetary policy response which will deliver as much stimulus as possible as soon as possible. As such, the RBNZ has asked banks to be operationally ready by the end of the year should it decide to take the OCR below zero.
  • Given the RBNZ's overly dovish May meeting, we expect the currency to remain broadly pressured in the sessions ahead, particularly against high-beta currencies, AUD and CAD, if the risk tone continues to recover, and against safe-haven currencies, USD, JPY and CHF, if the risk tone once again sours.
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