RBNZ plan supports short-term rates at par with official cash rate

“New Zealand's central bank said on Monday financial institutions may deposit the local currency with it in exchange for nominal government bonds to keep short-term interest rates at par with the bank's official cash rate,” per Reuters.

The news also added that the central bank, which delivered its sixth straight interest rate rise last week, added that the facility would allow institutions to lend NZ dollar overnight and "from tomorrow to the next day, on a secured basis."

Market reaction

NZD/USD fades the previous day’s corrective pullback from a two-year low, retreating to 0.6150 of late, as traders await the key New Zealand Q2 Consumer Price Index (CPI) data during early Monday.