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NZ Dollar Falls Against The Australian Dollar

Fuseworks Media
Fuseworks Media

Wellington, Dec 8 NZPA - The New Zealand dollar is continuing to reflect twists in the global financial story rather than domestic comments and data, with the main feature of its domestic session being a fall on the Australian cross.

Against the Australian dollar the currency fell below A82c to A81.65c by 5pm from A82.70c yesterday.

The NZ dollar was at US53.24c by 5pm, down from US53.37c at the same time on Friday.

Early on Saturday it dropped to around US52c, its lowest level in six years apart from a lower dip two weeks ago.

Bank of New Zealand currency strategist Danica Hampton cited renewed fears of a deep and prolonged global recession after news that US employers cut payrolls by a much larger-than-expected 533,000 in November.

But a sharp recovery in US stock markets helped revive investor confidence and lift the kiwi off its lows.

The international events eclipsed comments by Prime Minister John Key on the Agenda programme that he believed the NZ dollar could trade below US50c in the near future and below 80 Australian cents. His view of the trend is shared by others.

"The NZ dollar's downward trend, since March 2008, is intact," Westpac Institutional Bank said in a commentary today.

There was also confirmation of the slowdown in the construction sector today with news that seasonally adjusted volume of residential building work put in place in the September quarter was the lowest since June 2002.

Murray Hindley, ANZ Institutional Bank chief foreign exchange dealer, said a lot of foreign bonds denominated in NZ dollars were coming up for redemption soon and may not be rolled over. This was affecting both the NZ and Australian dollars.

Against the euro, the kiwi fell to a 10-year low around 0.4105 during the weekend, but recovered to be 0.4167 by today's local close.

The NZ dollar also dropped to around 47.75 yen, its lowest level in more than seven years. By 5pm today it was up to 49.45 yen.

The trade weighted index slipped to 54.07 at 5pm from 54.14 at 5pm on Friday.

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