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Kiwi dips to month low against Aussie

Friday 29th April 2011

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The New Zealand dollar dipped to its lowest level against the Australian currency in a month and fell against a broadly weaker greenback in the aftermath of yesterday's interest rate statement from the Reserve Bank.

The kiwi fell from US80.76c at 5pm yesterday to US80.18c at 8am today, and was down from A73.85c at 5pm against the aussie to a low around A73.25c early today, then edged higher to A73.39c at 8am.

The US dollar fell to a three-year low against major currencies on the Federal Reserve's intention to keep interest rates near zero, while softer-than-expected US jobs and growth data underscored the bearish sentiment.

The Fed said this week it would complete its US$600 billion bond-buying programme in June. But Fed Chairman Ben Bernanke signalLed no rush to tighten monetary policy with the jobs market still in a "very, very deep hole".

The high-yielding Australian dollar scaled a fresh post-float high of US$1.0948. The free float began in December 1983.

In this country, the NZ dollar fell sharply yesterday morning after Reserve Bank Governor Alan Bollard left the official cash rate unchanged at 2.5%, and in his statement mentioned that the high level of the NZ dollar was "unwelcome".

BNZ currency strategist Mike Jones said the NZ dollar had been the weakest performing currency yesterday and overnight.

Dr Bollard's rhetoric had the desired effect with the kiwi sliding against the US dollar yesterday, and after a brief bounce came under more selling pressure overnight, Jones said.

A modest decline in interest rate differentials between this country and Australia took a toll on the NZ dollar against the aussie.

ANZ bank said it expected support levels for the Australasian currencies to be investigated today.

"Markets have boiled over during the week and are in dire need of a consolidation or correction to finish the month," ANZ said.

Overnight the NZ dollar fell from 0.5434 euro at 5pm to a two-week low around 0.5390 early today, before moving up to 0.5411 euro at 8am. The kiwi dropped to 65.38 yen from 66 yen, while the trade weighted index was down to 68.21 at 8am from 68.66 at 5pm.

 

NZPA



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