March 19, 2020 / 10:04 PM / 12 days ago

New Zealand central bank steps in with new measures to beat coronavirus impact

WELLINGTON (Reuters) - New Zealand’s central bank announced emergency measures on Friday including term loans to banks, intervention in markets and an agreement with the U.S. Federal Reserve to access up to $30 billion to support the economy from the impact of coronavirus.

“The measures we are implementing today provide additional support to domestic financial markets. We will ensure our operations make financial markets operate smoothly, Assistant Governor Christian Hawkesby said in a statement.

A Term Auction Facility (TAF) will give banks the ability to access term funding, with collateralised loans available out to a term of 12 months, RBNZ said in the statement.

The bank is also providing liquidity in the FX swap market, to ensure funding can be accessed at rates near the Official Cash Rate (OCR).

RBNZ also said it has been providing liquidity to the government bond market.

In addition to these tools, RBNZ has an established role to provide liquidity in the New Zealand dollar foreign exchange market in periods of illiquidity or dysfunction, and is ready to undertake this role if required, it added.

RBNZ slashed interest rates by 75 basis points earlier this week and said it would go for large-scale asset purchases of New Zealand government bonds if further stimulus was needed to combat the economic impact from the coronavirus outbreak.

Reporting by Praveen Menon; Editing by Sandra Maler and Lisa Shumaker

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