The New Zealand dollar fell below 85 US cents to its lowest in more than two months as sentiment waned following a drop in business confidence and a weaker forecast payout to dairy farmers from Fonterra.
The kiwi touched 84.68 US cents early this morning, its lowest level since March 12 before the Reserve Bank began hiking interest on March 13. The local currency was trading at 84.95 US cents at 8am in Wellington, from 85.36 cents at 5pm yesterday. The trade-weighted index dropped to 79.44 from 79.71 yesterday.
The New Zealand dollar was the weakest performing major currency measured by Reuters. Sentiment toward the kiwi waned after the ANZ Business Outlook survey posted a third monthly drop in the face of rising interest rates, declining dairy prices and an elevated kiwi dollar. That followed Fonterra reducing its payout for the coming season and paring back its expectation for the season just ending. The kiwi faced a stronger US dollar overnight, with the greenback benefiting from weakness in the euro.
"The New Zealand dollar slipped in response to the (business confidence) survey's decline in momentum," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "The NZD/USD then came under further pressure overnight as the US dollar strengthened."
The New Zealand dollar slid to 91.95 Australian cents from 92.18 cents yesterday ahead of a report on Australian capital expenditure, which will be watched to see how the nation's economy is transitioning away from mining.
