NZ dollar weakens against major currencies

The kiwi dollar fell to 83.32 US cents overnight from 83.47 cents. Photo / File
The kiwi dollar fell to 83.32 US cents overnight from 83.47 cents. Photo / File

The New Zealand dollar fell amid concern time is running out for politicians in Washington to avert the fiscal cliff and help prevent the world's biggest economy falling into recession.

The kiwi dollar fell to 83.32 US cents from 83.47 cents at 5pm in Wellington yesterday. The trade-weighted index declined to 74.33 from 74.46.

Officials from President Barack Obama's administration told leaders of US business and financial-services groups that negotiations with House Speaker John Boehner have deteriorated in the last 24 hours, Bloomberg News reported, citing a person familiar with the meeting. Republicans in Congress will vote on Boehner's plan to raise taxes on incomes over US$1 million, though Obama is insisting on a US$400,000 threshold.

"The kiwi has had a stellar run in the last couple of weeks - the downside is where the risk lies," said Michael Johnston, director of foreign exchange at HiFX. "Financial markets are still focused on the US fiscal cliff negotiations which seem to have stalled."

The kiwi dropped yesterday after figures showed the economy grew 0.2 per cent in the third quarter, half the expected pace, while historical revisions showed New Zealand suffered two recessions in the past four years. The Reserve Bank has forecast a pickup in growth for the fourth quarter.

The New Zealand dollar fell to 51.17 British pence from 51.32 pence and dropped to 62.94 euro cents from 63.09 cent. It rose to 70.31 yen from 70.16 yen after the Bank of Japan yesterday increased its asset purchase programme. The kiwi fell to 79.47 Australian cents from 79.68 cents.

- BusinessDesk

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