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Kiwi tumbles on weaker-than-expected GDP numbers

Thursday 23rd September 2010

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The New Zealand dollar fell more than half a US cent after second quarter gross domestic product grew just a quarter of the pace expected.

The economy grew 0.2% in the three months ended June 30, according to Statistics New Zealand, short of the 0.8% forecast by a Reuters consensus survey and 0.9% expected by the Reserve Bank. In the previous quarter GDP grew by 0.6%.

The kiwi dollar was last trading at 73.08 US cents, down from 73.59 immediately before the announcement.

"The GDP numbers were weaker than most people thought and more importantly weaker than Reserve Bank factored into its forecasts." said Mike Jones a market strategist for Bank of New Zealand.

"That certainly means short term headwinds for the currency, and supports our view that rates will be on hold until next year."

Overnight the kiwi dollar broke into the 74 US cents range overnight on US dollar weakness, before slipping back into a holding pattern ahead of the GDP announcement.

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