The New Zealand dollar sank Monday after the central bank disclosed it conducted its biggest sell-off of the currency in seven years to lower an exchange rate that is squeezing exporters.
Data released by the Reserve Bank showed it sold 521 million New Zealand dollars ($410 million) during August. That came after the central bank governor, Graeme Wheeler, said the currency was too strong.
The disclosure pushed the currency known as the Kiwi down nearly 2 percent against the U.S. dollar to its lowest level in over a year before it recovered slightly to trade at $0.78. The currency has dropped 12 percent since July, when the central bank announced it was suspending its program of interest rate hikes.
Many would like to see it fall further, including Prime Minister John Key, a former currency trader.
On Monday, Key told reporters a New Zealand dollar worth $0.65 would represent a “Goldilocks rate: Not too high, not too low, just about right.”
However, he added, “Just because I might think that’s about the rate that works for exporters doesn’t mean that’s the rate it’s going to get to.”
The central bank had earlier been the first among developed nations this year to begin hiking interest rates. It raised the benchmark rate four times to 3.5 percent as it tried to cool the economy, which had been growing at a relatively fast clip of 4 percent.