The New Zealand dollar traded in a narrow range at lower levels yesterday and it is continuing to reflect events overseas.
News that New Zealand's annual current account deficit reached its lowest level in more than two decades in the year to March, had little impact on trading, as investors
continued to focus on trends in equity markets and the daily set of the yuan rate.
The NZ dollar was US70.39c at 5pm from US70.49c at 8am and US70.79c at 5pm on Tuesday.
Global equity and commodity markets advanced after China said that it would let the value of the yuan rise but there was confusion when it kept it at the same level on Monday.
"Global themes are dominant and the current theme at the moment is yuan fixing watching," said Imre Speizer, senior strategist at Westpac.
Speizer said the yuan trades in a narrow band around the fix and investors were learning that the fix was influenced by the close on the previous day.
Over time, the yuan would strengthen but Chinese authorities did not want it to be viewed as a one-way bet.
- REUTERS said the slide in the Australian dollar yesterday paused after China set the yuan midpoint at 6.8102 per US dollar, slightly higher than Tuesday's close at 6.8136.
BNZ strategist Mike Jones said global stock markets also snapped their 10-day winning streak overnight, weighing on risk appetite and growth-sensitive currencies, such as the New Zealand dollar.
Overnight, the New Zealand dollar climbed to its highest level against the euro in nearly three years, around €0.5775, but by 5pm it had fallen to €0.5740 from €0.5753 at the same time on Tuesday.
It was at 63.70 from 64.39 on Tuesday. The NZ dollar edged up against its transtasman counterpart to A80.79c from A80.65c at 5pm on Tuesday, while the trade weighted index fell to 67.80 from 68.08 at 5pm on Tuesday.
- NZPA
