RBNZ Withdraws Some Pandemic Support Measures

The New Zealand dollar recovered some of its recent losses as the greenback lost ground on Tuesday. NZD/USD rose to session highs of 0.7183, the pair last at 0.7175. Bulls look for a break of the March 5 high at 0.7197, while support is seen at the December 28 low of 0.7084.

• Data earlier in the session showed February Card Spending Total fell 3.2% M/M compared to a 1.2% decline previously Card Spending Retail fell 2.5% M/M, against estimates of -1.0%, prior -0.4%. This is the fifth consecutive month of decline, but Stats NZ did note that COVID-19 restrictions during the survey period are likely to have hindered spending.
• The RBNZ announced earlier that it would remove some of the temporary liquidity facilities put in place during the pandemic, though they added the decision has no implications on monetary policy stance.
• Thee measures to be removed are The Term Auction Facility and The Corporate Open Market Operation. The final operations will be held on March 16.
• "Financial market conditions have improved significantly since March 2020 when these facilities were introduced and the usage of these special facilities has been very low in the last six months. In addition, the Large Scale Asset Purchase, Term Lending Facility, and Funding for Lending programmes have resulted in a significant increase in system liquidity and a lower cost of funding for banks" said the RBNZ, adding: "The Reserve Bank will continue to monitor market conditions closely and is in a position to supply liquidity as required via its daily Open Market Operations or the reinstatement of these special facilities in the future if needed"