New Zealand dollar jumps on rate decision The governor of New Zealand's central bank has warned that Japan's monetary easing policies are having a knock-on effect on New Zealand's currency and harming the country's exports. The New Zealand dollar rose after the Reserve Bank of New Zealand held interest rates at 2.5 per cent, maintaining the currency's position as the second-highest yielder among the developed nations, behind Australia at 3 per cent. The currency rose 0.8 per cent against the US dollar to $0.8472, amid some expectations the central bank might have acted to stimulate the economy by cutting rates. But the central bank governor, Graeme Wheeler, warned that the strength of the currency was harming exports and said that the recent massive bond-buying scheme unveiled in Japan had contributed to the rise in the New Zealand dollar in recent weeks. "The New Zealand dollar remains overvalued and is higher than projected in March," he said. Further appreciation has occurred partly in response to the announcement of a substantial quantitative easing programme in Japan. The high New Zealand dollar continues to be a significant headwind for the tradeables sector, restricting export earnings and encouraging demand for imports. Japanese officials have stated that their policies are not aimed at targeting the yen, in line with an agreement signed by the G20 group of nations this year not to engage in competitive devaluations, also known as currency wars. Elsewhere in the currency markets, the euro fell against other major currencies after a survey showing a fall in German business confidence added to economic headwinds for the eurozone and increased expectations the European Central Bank will cut interest rates. The single currency hit a daily low of $1.2955 against the dollar after the monthly Ifo survey of around 7,000 German companies showed a dip in their confidence about the business climate and their expectations for the future in March. The euro fell 0.3 per cent against the pound to £0.8501 and was 0.2 per cent lower against the Japanese yen at Y128.82. The dip in the index, a closely watched indicator of the health of the eurozone's largest economy, came after surveys on Tuesday showed a further contraction in manufacturing and services industries in the single currency bloc in April. Foreign currency analysts said the negative data on the eurozone increased the chances the ECB would cut headline interest rates from 0.75 per cent when it meets next week. "The euro is changing its trading behaviour, failing to gain support from positive asset market performance while becoming increasingly vulnerable to negative data shocks," said analysts at Morgan Stanley.