The New Zealand dollar fell as investors bet a strengthening US economy will prompt the Federal Reserve to push up interest rates in the world's largest economy this year.
The kiwi slipped to 76.84 US cents at 8am in Wellington, from 77.02 cents at the New York close and 77.54 cents in New Zealand on Friday. New Zealand markets were closed on January 1 and 2 last week for New Year public holidays. The trade-weighted index was at 78.44.
The US dollar index, which measures the greenback against a basket of currencies, was recently above 91, its highest level in nine years, reflecting investor optimism about a recovery in the US economy. US third-quarter gross domestic product was revised higher heading into Christmas and last week's ISM Manufacturing Index of 55.5 showed the sector remains in expansion.
"As the New Year has opened with a surge of US strength, the New Zealand dollar has suffered along with most of its peers," Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note. "Over the longer term, we continue to expect further NZD/USD weakness."
BNZ expects the kiwi to fall to 70 US cents by the end of 2015 and to 66 cents by the end of 2016, Martin said.
