NZD slightly lower after RBNZ raised the interest rate smaller than expected, Turkish lira crashed by 15% after President Erdogan defended rate cuts

Earlier in the day, RBNZ hiked its interest rate to 0.75% and raised its long-term cash rate projection by 50 bps as it handed down its policy decision. After the press release, NZD immediately fell as far as 0.63% against USD to 0.6904. This is primarily because investors had previously expected a larger rate hike. Currently, NZDUSD is trading at 0.6913, down about 0.5%.

The Turkish lira dropped more than 15% on Tuesday after President Tayyip Erdogan defended the recent rate cut and vowed to keep his principles despite widespread criticism. Under his administration, the currency has experienced the worst moment in the past 20 years. Although inflation has soared to nearly 20%, Erdogan has applied pressure on the central bank to pivot to an aggressive easing cycle that aims to boost exports. This decision has greatly accelerated the depreciation of the currency.