The New Zealand dollar is heading for a 1.6 per cent weekly decline against the greenback amid uncertainty about when the Federal Reserve will resume hiking interest rates in the world's biggest economy.
The local dollar fell to US67.78c at 5pm yesterday from US68.89c last week, when the kiwi jumped to a nine-month high. It traded at US67.78c at 8am, down from US68.24c on Thursday. The trade-weighted index fell to 71.81 from 72.22 on Thursday and is heading for a 1.5 per cent weekly decline.
A BusinessDesk survey of 12 analysts predicted the local currency would trade between US67.20c and US71c this week. Five expected the kiwi to gain, five bet it would decline and two said it would stay largely unchanged.
Traders have had mixed messages from the Fed, with some officials upbeat in their assessment of the US economy, which would lead to higher interest rates, while chairwoman Janet Yellen was more circumspect, tempering optimism on the timing and pace of hikes.
"There seem to be some pretty strange signals from some of those Fed presidents over the past couple of weeks," said Mark Johnson, senior dealer foreign exchange at OMF in Wellington. "The Fed has a pretty clear message expecting a couple of rate hikes this year, but the issue for the market is they don't know when to price those things in."
Johnson said the kiwi will continue to trade in a tight range against the greenback with investors looking overseas for direction.
The kiwi fell to a seven-month low against the yen on speculation the Bank of Japan won't intervene to halt a rally in the Japanese currency ahead of a Group of Seven nations meeting next month. The kiwi dropped to 73.72 yen from 74.43 on Thursday.
New Zealand's two-year swap rate slipped one basis point to 2.17 per cent, and 10-year swaps fell two basis points to 2.91 per cent.
The kiwi increased to A89.87c from A89.64c on Thursday, and dropped to 4.3907 Chinese yuan from 4.4151 yuan. It decreased to 59.64 euro cents from 59.82c on Thursday, and was little changed at 48.15 British pence from 48.31p. BusinessDesk