The New Zealand dollar slipped against its major counterparts in the Asian session on Friday, after the Reserve Bank of New Zealand’s Deputy Governor Geoff Bascand suggested that a rise in bank capital requirement could pave way to an interest rate cut.
Bascand told that proposals to increase bank capital requirements may lead to tighter credit conditions.
That, in turn, could lead to higher borrowing costs and push inflation down.
“When we set the OCR, we set it with for a 18 month to 2 year look ahead. So let’s say we are making a decision in the third quarter of this year…we just have to feed that into our regular monetary policy decision making,” Bascand told.
“If we were worried, and thinking we were undershooting inflation, undershooting maximum sustainable employment, then we would obviously look for an OCR change…that is the implication,” he added.
Asian stock markets are mostly lower following the negative cues from Wall Street as weak economic data from the U.S. and Europe reinforced worries about the global economy and offset optimism about U.S.-China trade talks.
The kiwi dropped to a 9-day low of 1.0490 against the aussie, from a high of 1.0407 hit at 5:30 pm ET. The kiwi is seen finding support around the 1.06 level.
The kiwi slipped to a 9-day low of 0.6758 against the greenback, compared to Thursday’s closing value of 0.6801. The next likely support for the kiwi is seen around the 0.66 area.
The NZ currency that closed Thursday’s trading at 75.28 against the yen weakened to a 9-day low of 74.84. If the kiwi continues its fall, 73.00 is possibly seen as its next support level.
Data from the Ministry of Internal Affairs and Communications showed that Japan consumer prices rose 0.2 percent on year in January.
That was in line with expectations and down from 0.3 percent in December.
The kiwi dipped to a 9-day low of 1.6767 against the euro, reversing from a high of 1.6633 touched at 7:15 pm ET. On the downside, 1.70 is possibly seen as the next support level for the kiwi.
Looking ahead, German Ifo business sentiment index for February and Eurozone final consumer inflation for January are due in the European session.
Canada retail sales for December are scheduled at 8:30 am ET.
The material has been provided by InstaForex Company – www.instaforex.com