The Australian dollar hit a 10-year low against the US dollar after New Zealand’s central bank cut the country’s cash rate by a larger than expected 50 basis points.
The Aussie was trading as high as 67.83 US cents on Wednesday morning but fell more than 1.5 per cent after the Reserve Bank of New Zealand cut its official cash rate to 1.0 per cent in an attempt to reheat the country’s cooling economy.
The Aussie’s biggest one-day decline since April dropped it more than one cent to as low as 66.77 US cents as RBNZ governor Adrian Orr spoke to media and said further cuts were possible.
At 1335 AEST, the Australian dollar was worth 66.90 US cents, just above what had been its lowest level since March 18, 2009.
The RBNZ’s move came a day after the Reserve Bank of Australia held the local cash rate at 1.0 per cent but said it was prepared to reassess after weighing the impact of 0.25 percentage point cuts in June and July.