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In the latest statement released by the Reserve Bank of New Zealand (RBNZ) on Tuesday, the central bank will extend its asset purchasing program (QE) to a total of NZD 33bn now.

Key points from the statement

“The Reserve Bank of New Zealand has added $3 billion of Local Government Funding Agency (LGFA) debt to its Large-Scale Asset Purchase programme (LSAP). This represents approximately 30 percent of the total LGFA debt on issue, and takes the total size of the LSAP to $33 billion over 12 months.

The Reserve Bank’s Monetary Policy Committee (MPC) noted that purchases of New Zealand Government Bonds to date have successfully reduced longer-term interest rates. However, the negative economic effects of the COVID-19 outbreak continue to evolve.

The Committee agreed it was important that monetary policy operated as effectively as possible.”

NZD/USD off highs but still well bid

The Kiwi is off the 0.5965 highs but remains strongly bid around 0.5955 region following the release of the above statement. Broad-based US dollar retreat and the oil-price rebound underpins the spot amid a risk-on market profile.