KEY POINTS:
The New Zealand dollar traded in a range today near the US79c figure after falling on Friday night in offshore trading.
The kiwi fell from US80.60c around midnight Friday to about US79.40c seven hours later, and at 8am today was buying US79.59c. It spent its domestic session today between that level and US78.92c and settled at US79.29c at 4.50pm.
A drop in US shares on Friday and concerns that the global credit crunch would make the funding of current account deficits difficult took some edge off demand for the New Zealand dollar.
This country's current account deficit for the year to December was $13.8 billion, equating to 7.9 per cent of Gross Domestic Product .That is the lowest ratio since June 2005, but analysts say a deficit of over 5 per cent of GDP sets off alarm bells for investors.
Underlying the gloomy outlook was news today of a decline in building consents in February, while firms' expectations of their own activity fell to a 17-year low in the National Bank's monthly Business Outlook survey.
BNZ currency strategists said dips below US78c are unlikely to be sustained but moves beyond US81c also have not been sustained.
Trading in the New Zealand dollar on its US cross is expected to be choppy. There is a risk of a deep correction because of the deteriorating economic backdrop.
Against the Australian dollar the kiwi was at A86.47c shortly before 5pm from A86.81c at the open. It dropped below A86.60c at the weekend.
Against the euro the NZ dollar was at 0.5018 from 0.5037 at 8am.
At today's local close the kiwi was buying 79.25 yen, down from 80.14 yen at 5pm on Friday. The trade weighted index was 70.40 from 71.31.
Reuters currency rates:
NZ dlr/US dlr US79.29c US80.42c
NZ dlr/Aust dlr A86.47c A87.41c
NZ dlr/euro 0.5018 0.5093
NZ dlr/yen 79.25 80.14
NZ dlr/stg 39.75p 40.05p
NZ TWI 70.40 71.31
Australian dollar US91.65c US91.99c
Euro/US dollar 1.5807 1.5793
US dollar/yen 99.91 99.62
- NZPA
