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NZ Dollar Comes Under Competing Pressures, Moves Little

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, June 18 NZPA - The New Zealand dollar was subject to competing pressures overnight and opened on the local market little changed from where it left off yesterday evening.

Bank of New Zealand currency strategist Danica Hampton said the dollar was trapped by the "countervailing forces" of a weaker US dollar and lingering concerns about the health of the New Zealand economy.

By 8am today the kiwi was buying US75.53c, little different from the US75.61c at 5pm yesterday.

The greenback fell against the euro overnight as US housing starts plunged to their lowest level in more than 17 years in May, casting more doubt over an anticipated early Federal Reserve US interest rate increase.

But losses were limited, with traders also paring expectations of tighter monetary policy in the euro zone after European Central Bank executive board member Lorenzo Bini Smaghi said a quarter point hike should bring inflation below its target.

The NZ dollar opened locally today against the euro exactly where it finished at 5pm yesterday, on 0.4868.

Against the Australian dollar the kiwi slipped to A80c at 8am from A80.27c, while the NZ currency was also buying 81.54 yen from 81.50 at 5pm yesterday. The trade-weighted index was 67.89 at the local open from 67.96.

The BNZ's Ms Hampton said the generally weaker US dollar had pushed the NZ dollar to its overnight high against the greenback of US75.73c.

But heavy selling from a variety of real-money accounts prevented the kiwi heading higher, she said.

It seemed that worries about a sharp slowdown in the New Zealand economy, and increasing conviction the Reserve Bank would be cutting interest rates in the latter half of this year were taking a toll on the NZ dollar.

NZPA WGT Reuters mjd kn

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