Kiwi up as NZ rate cut falls below expectations

London

THE New Zealand dollar surged to its highest in more than a year on Thursday after its central bank made a smaller interest rate cut than some had expected, driving investors to trim bearish bets made on hopes of more aggressive easing.

The Reserve Bank of New Zealand said a strong kiwi was driving it to cut rates and that it saw potential for one more reduction by year-end and another by mid-2017. Traders said that was too slow relative to expectations with some going into Thursday's meeting expecting a 50 basis point cut.