Following in the footsteps of the Reserve Bank of Australia ten days ago the Reserve Bank of New Zealand made a quarter-percentage-point cut to its Official Cash Rate, taking it down from 2.25% to 2%.  As with the Aussie when the RBA made its move, the NZ dollar strengthened on the news, a) because the cut had been so widely anticipated and b) because it was not bigger.  In a world of ultra-low rates 2% is a highly-attractive return, and decent returns are exactly what investors are chasing at the moment.

They are not finding them in sterling after last week's Bank of England cut.  Worse, they foresee Bank Rate moving even closer towards zero by year-end, a view that was reinforced by an article in The Times by MPC member Ian McCafferty that echoed the Bank of England governor's threats the previous week.  As a result, the pound touched an all-time low against the Kiwi, losing a net two and a quarter NZ cents.