NZ dollar rally runs out of steam

The New Zealand dollar was mixed today when a rally faltered.

Dealers said comments by Finance Minister Bill English about the bleak state of the government accounts introduced downward pressure on the day but when the currency had been rising on improved US equity markets.

To add to the mixed picture, Australia's consumer price index undershot expectations by a significant margin in the March quarter but underlying inflation was stronger than forecast. This muddied the debate on their next interest rate move.

Mr English said the New Zealand Government's books were in worse shape than the Treasury's downside forecasts in December.

That helped the NZ dollar to finish near session lows at US55.56c. It had climbed to US56.32c at 8am from US55.67c at 5pm yesterday, having briefly dropped below US55c for the first time in a month early yesterday.

In the United States stocks rose after Treasury Secretary Timothy Geithner indicated most banks had sufficient reserves to protect against possible losses, sparking a rebound in bank shares. Though there was not much follow through in Asian equity markets.

The NZ dollar was at A78.86c at the local close from A79.24c yesterday, while the kiwi was buying 0.4296 euro from 0.4300.

The kiwi was little changed at 54.58 yen from 54.72 yesterday, and the trade weighted index, which had lifted to 56.49 at 8am, was back at 55.78 at 5pm, down from 55.91 yesterday.

- NZPA