NZD/USD drops below 0.58 as New Zealand declares emergency
- NZD/USD is flashing red, having faced rejection at 0.5847 in early Asia.
- New Zealand has declared a state of national emergency to counter the coronavirus outbreak.
With New Zealand declaring a state of national emergency, the selling interest around the New Zealand dollar is strengthening, pushing the NZD/USD pair to session lows under 0.58.
The currency pair failed to absorb selling pressure at 0.5847 early Wednesday and fell to a low of 0.5792 a few minutes before press time.
The number of coronavirus cases in New Zealand rose to 47 on Wednesday, pushing the tally higher to 205 and forcing the government to take the drastic step, which could last for at least seven days and weigh over the economy. The lockdown may be extended if the outbreak does not slow down.
The Reserve Bank of New Zealand recently cut rates to zero and announced an asset purchase program to help the economy absorb shocks arising from the virus outbreak.
The pair was better bid above 0.5840 in early Asia and looked set to extend its three-day winning run on the back of upbeat domestic data. New Zealand's trade deficit declined to NZ$ 3.26 billion in February from NZ $3.87 billion, as exports rose to NZ$ 4.92 billion from NZ$ 4.73 billion.
Looking forward, New Zealand's decision to impose lockdown will likely continue to weigh over the Kiwi. Deeper losses may be seen if the US fiscal stimulus falls short of expectations, sending the equity markets lower and boosting haven demand for the US dollar.