Sharechat Logo

NZ dollar may fall on weak commodity prices, sentiment: RBNZ

Wednesday 9th May 2012

Text too small?

The New Zealand dollar may depreciate as the price of locally produced raw materials declines and global market sentiment deteriorates, according to the Reserve Bank.

The kiwi has "increased strongly" since November as large economies embarked on printing money and investors were keen on higher-yielding assets, though that may ease amid heightened concerns about Europe's ability to meet its region-wide austerity demands.

In its latest financial stability report, the Reserve Bank said New Zealand's currency has been bolstered by investors spurning European assets, though that may turn around with a "deterioration in market sentiment or a more marked fall in commodity prices."

Last week, the New Zealand dollar dropped below 80 US cents for the first time since January, and traders are picking it will extend its decline this week.

The kiwi dollar fell to a four-month low this morning, reaching as low as 78.61 US cents. It was recently at 78.75 cents. The trade-weighted index fell to 70.59 from 70.94 late yesterday. Bank of New Zealand strategist Mike Jones said the currency could fall to 75 cents in the next few weeks.

Governor Alan Bollard has warned he may have to cut the official cash rate if the currency stays resiliently high without economic fundaments improving to support its strength.

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar mixed, buffeted by Fed talk and downunder data
Super Fund can expect lower returns over next decade - review
ANALYSIS: Should penalties for continuous disclosure breaches be relaxed?
Fletcher seeks urgent talks on Ihumatao stalemate
NZ economy grows 0.5% in June quarter, beating expectations
Restaurant Brands lifts 2Q sales; appetite for KFC offsets ditched Starbucks
Auckland jet fuel arrangements a potential barrier to new entrants
NZ dollar weaker after Fed split on outlook for further US cuts
Leading judge says court administration model 'outdated'
MARKET CLOSE: NZ shares fall; Goodman placement sees property stocks sold

IRG See IRG research reports