Dollar dips on Cullen rumour

Michael Cullen

A rumour that Finance Minister Michael Cullen had resigned was flatly dismissed by the Beehive yesterday, but not before it sent economists and foreign exchange dealers scrambling for their phones.

The rumour swept through financial markets about 4pm and triggered a modest fall in the New Zealand dollar.

A spokesman for Dr Cullen said he did not know how the rumour originated, but it was not true.

Some had suggested it might have come out of the Australian foreign exchange market, the Finance Minister's spokesman said.

The rumour comes only a month after Dr Cullen moved to quell speculation about him retiring before the next election.

The speculation was prompted by Prime Minister Helen Clark, who appeared to cast doubt in an interview with the Listener whether Dr Cullen would deliver budgets for the rest of the present parliamentary term.

The latest rumour of Dr Cullen's departure spread rapidly through currency markets before Government spokesmen quashed it.

Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney, said the New Zealand dollar slipped quickly to US62.6c from around US63c when the resignation talk emerged.

But other factors were also at play in the kiwi's weakness, Ms Trinh said.