The New Zealand dollar declined as currencies linked to commodity exports fell out of favour as hopes faded that the oversupply of oil will be reduced any time soon.
The kiwi fell to 68.30 US cents at 8am in Wellington, from 68.76 cents at 5pm yesterday. The trade-weighted index declined to 72.27 from 72.67 yesterday.
Currencies linked to commodity production such as the kiwi and the Aussie declined after oil prices dropped to a one-month low amid doubts that producing countries will freeze output to counter a supply glut. The Organization of the Petroleum Exporting Countries and other major oil producers are scheduled to meet in Doha, Qatar on April 17 to discuss a plan to rein in supply.
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However, doubts are growing that agreement will be reached after Saudi Arabia said it will only freeze production if Iran and others follow suit, and Russia reported its highest production in 30 years. The CRB Index, which measures a basket global commodities, had a broad decline with 15 of the 19 commodities weaker.
"Weaker commodity prices have seen the commodity currencies underperform," Bank of New Zealand currency strategist Jason Wong said in a note. "Thus, the New Zealand dollar and Australian dollar are the two weakest major currencies."
Tonight, all eyes will be on the GlobalDairyTrade auction, where prices for New Zealand's largest commodity export have fallen as supply outweighs demand, and Wong said he isn't anticipating a bounce.
"We don't expect to see much of a recovery in prices in the GDT dairy auction tonight. NZX dairy futures prices have been soft over the last couple of weeks and the weaker global commodity price dynamic over the past week won't help either," he said.
Today, ANZ Bank is due to publish its monthly commodity price index and Primary Industries Minister Nathan Guy is expected to detail plans to provide support to dairy farmers.
The New Zealand Institute of Economic Research will also publish its quarterly survey of business opinion and Auckland real estate agency Barfoot & Thompson is expected to publish its monthly housing data.
Across the Tasman, the Reserve Bank of Australia is expected to keep interest rates unchanged at 2 percent.
The kiwi slid to 89.82 Australian cents from 90.06 cents yesterday, fell to 59.94 euro cents from 60.40 cents, dropped to 47.88 British pence from 48.33 pence, weakened to 76.01 yen from 76.67 yen, and sank to 4.4242 yuan from 4.4540 yuan.