Currency: Dollar retreats from three-month highs

The New Zealand dollar retreated further from recent three-month highs after a weak business survey and rate cut from the Reserve Bank of Australia today.

By 5pm, the kiwi was at US58.27c from US59.40c late yesterday afternoon, having peaked around US59.75c early yesterday afternoon. It had a nearly US1c range today, capped by US58.85c.

Overnight, the kiwi was likely to find sellers at US55.55/60c, said Murray Hindley, chief foreign exchange dealer at ANZ Institutional Bank.

The kiwi slid against the aussie to A81.72c from A82.65c, and was also weaker against euro, yen and sterling.

A rate cut across the Tasman late this afternoon to 3 per cent, and a grim Quarterly Survey of Business Opinion from the NZ Institute of Economic Research, increased expectations of a Reserve Bank of NZ rate cut later this month.

The business survey found a net 47 per cent of firms reported a fall in their own activity in the March quarter, seasonally adjusted - the worst result since at least 1970 and worse than the 44 per cent in the December quarter survey.

"(The kiwi's) had such a strong move in the last five or six sessions, one would suggest that with the RBA moving on rates now, people are going to look to see what sort of a rate move (will come) from the RBNZ," Mr Hindley said.

"With the weaker QSBO, maybe people are starting to price in half a percentage point."

The yen and US dollar climbed today on the back of caution about banks, which overcame earlier optimism that had benefited global stocks and higher risk, higher yield currencies such as the kiwi.

Currency rates:

5pm today 5pm yesterday

NZ dlr/US dlr US58.27c US59.40c

NZ dlr/Aust dlr A81.72c A82.65c

NZ dlr/euro 0.4355 0.4380

NZ dlr/yen 58.65 59.90

NZ dlr/stg 39.64p 39.77p

NZ TWI 57.97 58.78

Aust dlr/US dlr 71.33c 71.86c

Euro/US dlr 1.3376 1.3560

US dlr/yen 100.64 100.85

- NZPA