Kiwi drops over pending EU vote

The kiwi was still benefiting from "reasonably good fundamentals" after Thursday's better-than-expected economic growth. Photo / iStock
The kiwi was still benefiting from "reasonably good fundamentals" after Thursday's better-than-expected economic growth. Photo / iStock

The New Zealand dollar is heading for a 0.2 per cent decline against the greenback this week as investors shy away from taking strong positions before the June 23 referendum in the UK on whether to quit its membership of the European Union.

The kiwi traded at US70.41c at 5pm yesterday from US70.55c a week ago in New York. It was little changed from US70.46c at 8am yesterday, down from US70.76c on Thursday. The trade-weighted index fell to 75.16 from 75.59 on Thursday, and is heading for a 0.6 per cent decline this week.

A BusinessDesk survey of seven currency analysts on Monday predicted the kiwi would trade between US68.80c and US72c this week. Three picked a decline, three expected little change and one projected it to gain.

Polls this week had shown growing support for the UK to leave the EU, though the murder of Labour MP Jo Cox, speculated to have been linked to the referendum, has tempered support for an exit. The British pound recovered some of its recent losses on the prospect of a successful "leave" vote, known as "Brexit", and the kiwi fell to 49.46 pence from 49.90 pence on Thursday.

"The murder in London on Thursday night has changed the skew on Brexit a little bit," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "It's really hard to see the kiwi break out of the US69.50c to US71.50c range ahead of Brexit."

The kiwi was still benefiting from "reasonably good fundamentals" after Thursday's better-than-expected economic growth and yesterday's upbeat manufacturing and consumer confidence surveys, he said.

The local currency fell to 73.39 yen from 73.75 yen on Thursday, having touched a three-year low against Japan's currency after the Bank of Japan held off adding more stimulus.

The kiwi declined to A95.45c from A95.71c on Thursday. It was little changed at 62.62 euro cents from 62.74 cents.

- BusinessDesk

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