Currency analysts are betting on continued declines for the New Zealand dollar as officials fight to boost growth in a country that was heralded 2014's rockstar economy.
The Kiwi sank over 2 percent to a near five-year low of 70 U.S. cents Thursday after the Reserve Bank of New Zealand (RBNZ) lowered the benchmark cash rate by 25 basis points for the first time in four years.
"Today's announcement is significant for NZD because it marks the beginning of what could turn into a more prolonged easing cycle. Desynchronization of monetary policy should not only drive NZD/USD below 70 cents but take it lower against many other major currencies," said Kathy Lien, managing director of FX strategy at BK Asset Management.
Indeed, chances for parity with the Australian dollar, a popular call this year, are now over, noted Evan Lucas, market strategist at IG.
RBNZ Governor Graeme Wheeler also left the door open to future cuts should economic data weaken further, adding that the currency remains overvalued despite a 17 percent fall against the greenback over the past year. The move surprised many economists who expected the bank to hold fire following consecutive hikes throughout 2014; the RBNZ was the first central bank in the developed world to increase rates after the global financial crisis.