The New Zealand dollar fell to a two-week low against the yen as investors pared back expectations the Bank of Japan will soon introduce more stimulus.
The kiwi fell as low as 88 yen on Wednesday morning, and was trading at 88.15 yen at 8am from 88.86 yen at 5pm.
The local currency benefited from a weaker greenback, touching a week-high of 86.81 US cents, and was trading at 86.71 cents at 8am from 86.31 cents.
The Japanese currency was the best performer overnight after the nation’s central bank surprised some investors by not adding extra stimulus following a two-day policy meeting.
Governor Haruhiko Kuroda signalled there was no need for additional stimulus to escape deflation and signalled confidence that the world’s third-largest economy would recover from the impact of this month’s sales tax rise.
“Governor Kuroda suggested the economy would be resilient to the increased sales tax introduced at the beginning of April. However, the bank stands ready to ease further if necessary, which we suspect may occur later in the year,” said Kymberly Martin, senior market strategist at Bank of New Zealand.
“The fact that it did not announce any measures this time will have surprised some, helping add to the strengthening tone in the Japanese yen.”
In New Zealand, data is released on electronic card transactions for March while overseas the Federal Reserve releases the minutes from its last meeting and data will be published on the UK and German trade balances.
The New Zealand dollar slipped to 51.76 British pence from 51.94 pence after UK data on manufacturing and industrial production beat expectations, turning investor attention to the potential for interest rate hikes.
The kiwi slipped to 92.63 Australian cents from 92.92 cents ahead of reports on Australian consumer sentiment and housing finance.
The local currency was little changed at 62.82 euro cents from 62.80 cents while the trade-weighted index was steady at 80.50.