WELLINGTON: The New Zealand dollar fell below 67 U.S. cents for the first time in five years on Thursday, extending its decline against a broadly firmer greenback as a slide in dairy prices narrowed the odds on more rates cuts.
It also slumped to a near two-year low against its Australian peer, which climbed as far as NZ$1.1413.
The latest move came after a fortnightly auction held by Fonterra saw average dairy prices fall 5.9 percent. That marked the eighth consecutive decline and took average selling prices to their weakest since July 2009.
“There is little on the horizon to suggest there will be a meaningful turnaround in international powder prices anytime soon,” analysts at ANZ wrote in a research note.
“It is now clear that additional RBNZ monetary policy action (above and beyond previous expectations) is warranted,” they said, adding they expect the Reserve Bank of New Zealand to take the cash rate back to 2.5 percent, from 3.25 percent currently.
The RBNZ lowered rates last month by 25 basis points and is considered almost certain to follow up with another cut later this month.
