The New Zealand dollar slumped to a fresh one-year low on Thursday after the country's central bank surprised the market by releasing a statement that warned the currency is at risk of a "significant" fall from still unjustified levels. Traders said the timing of the release caught many offguard and marked an escalation in the bank's rhetorical campaign to lower the currency.
In it, RBNZ Governor Graeme Wheeler said the real exchange rate has not adjusted materially to the recent fall in commodity prices. "Unjustified and unsustainable are important considerations in assessing whether exchange rate intervention is feasible," he said. The kiwi dollar, already under pressure, promptly dropped below 80 US cents for the first time since mid-September 2013. It fell as far as $0.7998 and last traded at $0.8008. The kiwi was hovering around $0.8070 before the statement. The Aussie, though, was dragged lower by the renewed selloff in the kiwi. It dipped to a fresh eight-month low of $0.8818 , breaking the previous trough of $0.8831 plumbed on Tuesday.