The dollar sank to yet another all-time low yesterday, and the stock exchange hit its lowest level in 22 months on a day when the Reserve Bank did what was expected by leaving its key overnight lending rate unchanged.
Economists and dealers said the reason for the declines could be attributed to Australian interest rates and a reference by Dr Don Brash to the possibility of "stagflation."
Anthony Byett, senior economist at ASB Bank, said the biggest factor contributing to the weakness of the dollar was the unexpected decision by the Australian Reserve Bank to leave the Australian overnight cash rate unchanged.
That triggered selling of both Australasian currencies, he said.
The New Zealand dollar fell to 39.97USc yesterday, its lowest mark against the greenback, before closing at 40.11c.
The Australian dollar plunged suddenly to 53.48USc and later fell to a record low of 53.42USc before the Reserve Bank of Australia was suspected of checking prices.
That speculation lifted the currency back up to 53.70c.
Its previous record low was 53.64c, last month.
On the cross against the Australian dollar, the New Zealand dollar ended at around 74.78Ac, down fractionally from late Tuesday. The kiwi has lost almost 20 per cent of its value this year, and the NZSE-40 closed down 27.94 points, at 1951.88.
- AGENCIES
Dollar hits low of 39.97USc
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