The New Zealand dollar held its value after Federal Reserve officials assured markets about the withdrawal of economic stimulus.
The kiwi slipped to 77.98 cents from 78.19 cents at the 5pm market close in Wellington yesterday. The trade-weighted index weakened to 73.69 from 73.75 yesterday.
Federal Reserve officials yesterday stepped up their campaign to clarify comments by chairman Ben Bernanke about reducing stimulus that have caused volatility in global financial markets. Officials including Federal Reserve Bank of New York president William Dudley said the central bank may prolong its asset purchase programme if the economy's performance fails to meet its forecasts.
"The Fed speakers are all telling us that the market has misunderstood what the Fed was saying and that the market reaction has been an overreaction," said Stuart Ive, senior client adviser FX at OM Financial. "What that has done is temporarily stop the downside movement" of the kiwi.
The local currency is likely to stay in its broad range of 76.80 US cents to 78.60 cents heading into next week, Ive said.
