New Zealand Dollar Surges as Central Bank Holds Rate at 2.25%

New Zealand’s dollar climbed more than 1 percent against the greenback after the nation’s central bank held its benchmark interest rate unchanged, disappointing some market participants who had expected a reduction.

The kiwi jumped at least 0.9 percent versus all of its 16 major counterparts after Governor Graeme Wheeler kept the official cash rate at 2.25 percent and said in a statement accompanying the decision that further easing may be required to reach the bank’s inflation target. A lower currency would be desirable, he said.

“The guidance did not clearly signal the next cut would be in June,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland. “Markets had upgraded the chances of a cut from 30 percent to 46 percent during the previous two days and were clearly disappointed, the New Zealand dollar and swap rate are rising in response.”

The kiwi climbed 1 percent to 69.17 U.S. cents as of 8:26 a.m. on Thursday in Sydney, after jumping as much as 1.4 percent. It declined 0.8 percent on Wednesday.

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