Reserve Bank of New Zealand decided to raise the interest rate by 0.25% to 3.50%. This step should help to keep inflation near the target level of 2.0%. In addition, the RBNZ noted the instability of the national currency, the expected GDP growth of 3.7% in 2014, and the fact that economic growth in the country's major trading partners in the first half weakened. The housing market in the country is supported by immigration flow.
The main reason for the sharp decline in the New Zealand dollar today was a statement regarding that the New Zealand dollar has a significant potential for reduction. In this regard, we expect further downward movement of the New Zealand dollar in the medium term with target near 0.84.