AMP Capital New Zealand, which manages more than $18 billion of assets, is betting the kiwi dollar will fall as economic growth passes its peak and the nation's interest rate premium narrows because other central banks are cutting stimulus programmes.
The New Zealand dollar fell more than US1c on Wednesday and was trading at about US87c yesterday as traders mulled a possible pause in the Reserve Bank's tightening cycle after lower-than-expected inflation figures coincided with a sharp drop in dairy prices.
AMP Capital, which is overweight cash in its portfolio and underweight the New Zealand dollar, said current levels near a post-float high were not sustainable.
"We have got an increasingly unjustified strong currency, especially after the most recent decline in commodity prices," said chief economist Bevan Graham. "It's just a matter of time before we see some downside."
The strength of the currency has been a headache for the Reserve Bank which embarked on a cycle of raising interest rates this year in a bid to head off inflation.
