The New Zealand dollar eased this afternoon as another sharp fall in business confidence was reported.
The National Bank's Business Outlook report for August showed further signs of economic regression after recovery in the first half of this year.
The number of businesses surveyed who expected general business conditions to
improve in 12 months' time was down 12 points compared with the July survey.
The New Zealand dollar slipped to US71.05c at 5pm, compared with US71.45c at 8am, but was still ahead of its US70.52c level at 5pm on Friday.
Goldman Sachs & Partners' New Zealand strategist Bernard Doyle said the National Bank survey results underscored why the Reserve Bank should not be raising interest rates.
"The only rationale given the weak tone of partial data would be concern around inflationary pressure. However, the fact that pricing intentions have stabilised ahead of a GST increase is indicative of contained pricing pressure in our view," he said.
"We would regard a September 16 hike as unlikely, and expect market pricing to further marginalise the likelihood of this outcome."
Westpac's Weekly Forex Outlook said it maintained a "sell bias" on the New Zealand dollar against the US dollar, although it was a "low confidence view".
It said US Federal Reserve chairman Ben Bernanke's speech on Friday, where he pledged to ensure a continuation of the US economic recovery using unconventional measures if necessary, had given the markets a bullish tone to start this week.
The kiwi eased against the Australian dollar to A79.05c at 5pm, from A79.11c at 8am and A79.45c at 5pm on Friday.
The trade weighted index was at 66.45 at 5pm, from 66.73 at 8am and 66.13 at 5pm on Friday.
- NZPA
