The New Zealand dollar fell today as the US dollar raced ahead and as investors prepared for tomorrow's interest rate decision by the Reserve Bank of New Zealand.
The central bank is expected to cut the official cash rate by 100 basis points and economists say the largedrop has been factored in. But the focus will inevitably shift to how much more rates will be cut and how much of the cuts banks pass to customers.
The NZ dollar fell overnight on Tuesday as the greenback raced ahead. It traded at a 21 month high against a basket of currencies today.
The rise of the United States currency came as investors bet that interest rates outside the US could fall steeply to shore up global growth.
Weak equity markets also again made investors nervous of risk and more likely to buy US dollars. The yen climbed and the euro was weak.
By 5pm the NZ dollar was at US60.20c at 5pm from US61.44c at 8am and US61.78c at 5pm yesterday.
The NZ dollar was down against the Japanese currency, at 60.20 yen by 5pm from 62.85 yen at 5pm.
But the kiwi rose to 0.4662 euro by 5pm from 0.4632 and was at A89.40c from A88.55c yesterday. The trade weighted index was 60.63 from 61.24.
On Tuesday the consumer price index had come in bang on expectations, with an annual rise of 5.1 per cent, and while the detail proved more robust than anticipated, economists did not think that would stop the Reserve Bank easing interest rates aggressively tomorrow.
