The New Zealand dollar has touched its lowest level in more than five years against the greenback and the pound, and its lowest against the Australian dollar in a year and a half, after signs the economy is slowing stoked expectations the Reserve Bank would make further interest rate cuts.
The kiwi dropped as low as 67.45 US cents, and was trading at 67.73 cents at 8am in Wellington, from 68.06 cents at 5pm yesterday. The local currency touched 42.92 British pence and was trading at 43.10 pence at 8am, from 43.26 pence yesterday. It touched 87.64 Australian cents, and was trading at 87.78 cents at 8am from 88.64 cents yesterday.
New Zealand's economy is showing further signs of weakening, after business confidence turned pessimistic for the first time in four years, while growth in building consents stalled, and farmer confidence slumped to the lowest level in a decade amid low dairy prices.
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Traders are pricing in an 84 percent chance that Reserve Bank governor Graeme Wheeler will reduce the benchmark interest rate at this month's meeting, according to the overnight index swap curve, and Deutsche Bank said a further two cuts were likely in September and October, taking the benchmark to 2.5 per cent.
