Currency: Kiwi swings in 75-point range

The New Zealand dollar swung yesterday on the back of a wider current account deficit, although it remained within a month-old range.

By 5pm the kiwi traded at US46.82c, down from Wednesday's close of US47.27c and well down from the intra-day high of about US47.40c.

The aussie was at US54.40c, down from its US54.63c close here on Wednesday.

Derek Rankin, of Bancorp Treasury Services, said the kiwi traded in a band of about three-quarters of a US cent in the last 24 hours, and was likely to trade within the current range of US46.50c and US47.50c overnight.

"The trend in the New Zealand dollar is reasonably choppy still ... there does seem to be a reasonable amount of capital flow, going both in and out," Mr Rankin said.

"You've got capital flow coming in, investing in New Zealand bonds, and equally there seems to be some flow going out -- in the face of our higher yields.

"There's no real direction to it. The Australian dollar's down as well -- I think the world's just jittery.

"People are saying, if we do have conflict, do we want to be invested in New Zealand dollars, or maybe we want them in US dollars," he said.

The kiwi may have been squashed slightly by yesterday's current account deficit figures, which showed New Zealand spent $624 million more than it earned in the June quarter, according to Statistics New Zealand.

The June quarter figure was close to economists' estimates, and the June year deficit of $3.004 billion was almost exactly in line.

The annual deficit has swollen from $2.595 billion in the March quarter, at around 2.5 per cent of gross domestic product, but economists said it was likely to continue worsening.

Statistics NZ also released merchandise trade data for August today, which showed a sharp and possibly worrying deterioration in the trade position.

Instead of an estimated deficit of $200 million, there was a $542 million deficit.

On the crosses at 5pm the kiwi was trading at A86.06c (A86.54c at Wednesday's close), 57.56 yen (57.94), 30.02 pence (30.30), 0.7011 Swiss francs (0.7042), and 0.4786 euro (0.4813). The aussie was buying $1.1622 ($1.1568).

On the money market, 90-day bills were steady at 5.87 per cent, the trade-weighted index was at 54.92 (54.27) while the monetary conditions index eased to minus 399 from minus 367 at yesterday's close.

The April 2004 bonds yields were at 5.64 per cent (5.55), the November 2006 bonds rose to 5.90 per cent (5.78), and the November 2011 bonds rose to 6.06 per cent (5.93).

- NZPA