NZ dollar hits five-week low against Aussie

Tuesday 7th December 2010

The New Zealand dollar hit a five-week low against the Australian dollar before recovering after the Reserve Bank of Australia left interest rates unchanged.

The RBA left its benchmark rate at 4.75% as expected after last month's rate rise, and rates are tipped to remain on hold across the Tasman into next year.

The central bank said the economy was growing but inflation would not become a problem for at least six months. The RBA believed policy was at an appropriate level following its rate increase and mortgage lending hikes.

The kiwi slipped to A76.64c but by 5pm had recovered to A76.90c. That was well below its level of A77.20c late yesterday afternoon.

Any attempt to break above A77.30c was unlikely as the focus was turning to Thursday's interest rate announcement in this country, ANZ said.

The Reserve Bank of New Zealand's official cash rate is currently 3.00%. A Reuters poll of 18 economists forecast a 25-point rate rise between March and June next year.

The kiwi was little changed against the US dollar, sterling and euro - at US76.18c, 48.42p and 0.5710 euro respectively.

The NZ dollar slipped against the yen to 62.84 from 63.19 yen.

The trade weighted index fell to 68.50 from 68.65.

The euro remained under pressure after hitting a record low against the Australian dollar, as the European debt crisis still split the region.

European finance ministers were under pressure to boost the size of a 750 billion euro ($NZ1313 billion) rescue fund to stop the debt crisis from spreading.

Also under pressure was the US dollar, which hit a three-week low against the yen following a flat close on Wall Street.

NZPA

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