In the May Financial Stability Report, the Reserve Bank of New Zealand said that the financial system is sound but vulnerable.

”While New Zealand has so far come through the COVID-19 pandemic better than initially feared, vulnerabilities in the financial system remain,” Reserve Bank Governor Adrian Orr says in releasing the May Financial Stability Report.

“Successful public health measures along with substantial monetary and fiscal policy support, helped to prevent many business failures and a larger rise in unemployment. Key New Zealand export prices have also been resilient, with dairy prices at their highest level in several years.

“Yet, despite doing better than feared, border restrictions, supply chain disruptions, and social distancing have reduced activity in affected sectors, and some businesses remain vulnerable.”

NZD/USD implications

Meanwhile, the NZD/USD was pressured overnight on a resurging greenback. 

NZD/USD fell from a high of 0.7203 to a low of 0.7115. There was little reaction in the market to this particular event though.