The New Zealand dollar eased today as investors bought the US dollar following concern from the Group of Seven about currency volatility.
The kiwi eased to US78.73c , slightly lower than its opening session and down more than a US cent down on Friday's close of US79.91c.
Dealers
said the kiwi came under pressure from weak equity markets offshore on Friday and then from a statement from the G7 's finance ministers, which was seen as supportive for the US dollar.
The kiwi also staged a short-lived d ip after an unexpectedly low fall in February retail sales, down 0.7 per cent due to lower car sales .
Westpac analyst Michael Gordon said there was a sense the kiwi dollar would fall further when London opened.
He said the G7 statement was one of the most significant in years, "indicating that officials now see the US dollar's continued decline as not just `undesirable' but a genuine threat to economic and financial stability".
The change in language hinted that intervention was a possibility .
"Before the weekend there wasn't any great agreement on where currencies should be."
On the other crosses, the kiwi was generally weaker, although it gained a little on the Australian dollar after weaker house lending data there.
Nevertheless, the kiwi still closed weaker than Friday at A85.45c (A85.65c), 79.46 yen (81.56 yen) and 0.5012 euro (0.5066 euro). The Trade Weighted Index slid to 70.10 from 71.02.
Looking ahead, the BNZ said the global backdrop of shaky equity markets and a firmer greenback would keep the New Zealand dollar heavy against the US dollar this week.
But solid support around the US78-US78.30c level would slow its descent.
Market watchers were awaiting tomorrow's March quarter consumer price index, which is expected to rise 0.8 per cent, taking the annual inflation rate to 3.5 per cent and reaffirming the view that interest rate cuts were unlikely in the near term.
Currency rates:
NZ dlr/US dlr US78.73c US79.91c
NZ dlr/Aust dlr A85.45c A85.65c
NZ dlr/euro 0.5012 0.5066
NZ dlr/yen 79.46 81.56
NZ dlr/stg 39.93p 40.48p
NZ TWI 70.10 71.02
Australian dollar US92.15c US93.31c
Euro/US dollar 1.5709 1.5774
US dollar/yen 100.96 102.09
- NZPA
