NZ dollar drops to three-month low

The kiwi touched 64.18 US cents and was trading at 64.74 cents at 8am in Wellington, from 64.84 cents at 5pm yesterday.  Photo / iStock
The kiwi touched 64.18 US cents and was trading at 64.74 cents at 8am in Wellington, from 64.84 cents at 5pm yesterday. Photo / iStock

The New Zealand dollar fell to its lowest level in more than three months even as some optimism returned to financial markets, as investors remained wary about the outlook.

The kiwi touched 64.18 US cents and was trading at 64.74 cents at 8am in Wellington, from 64.84 cents at 5pm yesterday. The trade-weighted index hit a seven-week low of 71.01, and was at 71.51 at 8am from 71.64 yesterday.

Equity markets rose in the US following stockmarket gains in China, with the Shanghai Shenzhen CSI 300 Index advancing 2.1 percent, and as a recovery in the price of oil offered investors some confidence. Still, the slump in oil prices remains a concern and investors are wary about holding commodity-linked currencies such as the kiwi, given New Zealand interest rates are expected to continue declining this year.

"Yesterday we had a massive selloff in commodities, with new multi-year lows in oil so things really spiraled down," said Imre Speizer, senior market strategist at Westpac Banking Corp in New Zealand. "Markets, although they rebounded last night, were selective about what currencies they decided to buy in this rebound."
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The kiwi dollar was out of favour, given expectations the Reserve Bank may reduce the benchmark interest rate two more times this year, Speizer said. He expects the kiwi to fall to 62 US cents by March.

In New Zealand today, food price data for December is released at 10.45am, the last key release ahead of fourth-quarter inflation data is published next week.
The New Zealand dollar fell to 92.66 Australian cents from 93.43 cents yesterday, slipped to 44.89 British pence from 45.02 pence, and slid to 4.2658 yuan from 4.2726 yuan. It advanced to 76.50 yen from 76.16 yen and was little changed 59.61 euro cents from 59.57 cents.

- BusinessDesk

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