Dollar ends lower, intervention unlikely

The New Zealand dollar was lower today but dealers largely dismissed speculation that the Reserve Bank of New Zealand intervened to push it down.

The New Zealand dollar was US71.95c at 5pm, little changed from US72.02c at 8am and down from US72.70c at 5pm yesterday.

The big move down came around 6.30am before the local market got under way, but after a statement from the US Federal Reserve and a fall in the US stock market in the last hour of trading.

The Reserve Bank of New Zealand (RBNZ) does not comment on intervention and dealers said it can intervene openly by transacting with a number of banks or quietly by just dealing with one which keeps it quiet. To have impact, it is more likely to intervene openly.

Imre Speizer, Westpac's senior market strategist, said the RBNZ historically intervened when the trade weighted currency index was between 15 per cent and 20 per cent above the long-run average and at the moment it was only 8 per cent above.

"It was quite a messy night for everything really. The FOMC was the big event of the night," he said.

The Fed upgraded its assessment of the US economy, saying activity had picked up after a severe downturn, but renewed its pledge to keep rates exceptionally low for an extended period to support a fragile recovery.

The US central bank was seen as more "dovish" than expected. US stocks rallied then fell and there was some mystery as to why the stocks fell so suddenly.

BNZ Capital strategist Mike Jones said a late spike in risk aversion followed the sell-off in US equities and boosted safe haven demand for the US dollar. This put downward pressure on the NZ dollar against the greenback.

The NZ dollar rose above US73c on Wednesday on better than expected growth data and after dairy co-operative Fonterra earlier upgraded it payout forecast.

By 5pm the NZ dollar was buying 0.4888 euro from 0.4908 at 5.15pm yesterday and 65.33 yen from 65.98 yesterday.

Against the Australian dollar, the NZ dollar edged lower to A82.66c from A82.90c yesterday. The trade weighted index dropped to 65.46 from 65.88.

Currency rates:

5pm today 5.15pm yesterday

NZ dlr/US dlr US71.95c US72.70c

NZ dlr/Aust dlr A82.66c A82.90c

NZ dlr/euro 0.4888 0.4908

NZ dlr/yen 65.33 65.98

NZ dlr/stg 43.99 44.32

NZ TWI 65.46 65.88

Aust dlr/US dlr 87.07c 87.70c

Euro/US dlr 1.4724 1.4818

US dlr/yen 90.81 90.70

- NZPA