* Kiwi falls 2 pct after RBNZ cuts interest rate
* Yen dented by report of LDP lawmaker view on monetary policy
* Yamamoto quoted saying Oct 30 ‘good opportunity’ for BOJ easing
By Jemima Kelly
LONDON, Sept 10 (Reuters) - New Zealand’s dollar tumbled on Thursday after the country’s central bank cut interest rates and said policy could be eased further if China’s economy continues to slow down.
While moves among other major currencies were generally more subdued, the yen also slipped after reported comments by a Japanese ruling party lawmaker put renewed focus on the possibility of yet more monetary easing by the Bank of Japan.
A rate cut from the Reserve Bank of New Zealand had been widely expected by investors. But the RBNZ also revised down its outlook for global growth and outlined a scenario where a sluggish China, the country’s main trading partner, could push its benchmark rate towards 2 percent - a record low.
The Kiwi dollar slid by over 2 percent after the policy statement to as low as $0.6256, before recovering a little to around $0.6297 in European trading, still down 1.7 percent on the day.
“The key was always going to be the statement, given that the cut itself was pretty much priced in, so I suppose (RBNZ Governor Graeme) Wheeler gave enough to the market to be fully convinced that there’s more to come,” said Bank of Tokyo-Mitsubishi UFJ’s European head of global markets research in London, Derek Halpenny.
“But (the Kiwi dollar) has come a long way now so I’d be hard-pressed to be advising customers that it’s a strong sell at these levels.”
Traders said the yen fell after Bloomberg quoted Japanese ruling Liberal Democratic Party lawmaker Kozo Yamamoto as saying in an interview that the BOJ’s policy meeting on Oct. 30 would be a “good opportunity” for additional monetary easing.
The dollar briefly rose to 121.38 yen, its highest since Aug. 31, after Yamamoto’s comments. It was last trading at 120.88 yen, up 0.3 percent on the day.
The greenback rose against the yen in a knee-jerk reaction in a thin market, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
“He is a politician and this is his opinion. He is not a BOJ board member,” Halley said, adding that the dollar later came off its high versus the yen on position squaring.
The euro edged up 0.2 percent to $1.11865 as uncertainty persisted over whether the U.S. Federal Reserve will raise rates at its policy meeting next.
Investors are also eyeing the Bank of England, which is due to release minutes from its meeting on monetary policy later in the day. It is expected to keep rates at 0.5 percent, with just one of the nine members of its rate-setting committee seen voting for an immediate hike. (Editing by Hugh Lawson)