China Halts Yuan Slide as New Zealand Dollar Tumbles
Published on: 08/9/19 9:06 AM
The second week of August 2019 delivered an FX Market shocker as the New Zealand dollar tumbled to new lows but got respite from a stabilized Yuan. The market also witnessed a flurry by global central banks cutting rates to stump onset of negative economic growth largely influenced by the escalating tariffs war. Forex Broker comparison service FXBrokerFeed brings you the latest news and updates in the FX Broker Market, featuring a historic New Zealand Dollar tumble and PBoC action to stem the Yuan downward slippery path.
New Zealand Dollar Tumble
The Reserve Bank of New Zealand slashed the dollar by 50 bps amidst a worsening global economic downturn. Reserve Bank Governor Adrian Orr intimated at further rate cuts in the horizon considering dwindling economic fortunes beset by the ongoing tariffs standoff between the US and China
Said Orr at a press conference in Wellington, “It’s within the realm of possibility that we might have to use negative interest rates or other non-standard measures”. The news caught the market by surprise as the RBNZ lowered economic forecast to massage a 1-3% inflation target.
Orr further indicated that the banks forward path, which shows the average OCR falling to a low of 0.9% next year was good guidance as to how they saw the interest rate path unfolding.
China halts Yuan Slide
The Peoples Bank of China stepped in to regulate the Yuan exchange rate and loosen grip by national currency traders’. The PBoC had earlier in the week set the USD/CNY below market rate with the dollar exchanging 7.00 above the Yuan.
The regulatory action at least debunked Trump’s “currency manipulator” label, and infused an immediate positive response from a market
that is getting wary of a currency wars breakout.
Additionally, China’s export trade defied forecasted gravity to post unexpected and impressive July data. This at a time global central banks are cutting interest rates to provide needed stimulus for slow economic growth.
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