Currency: Dollar weak ahead of RBNZ rate call

The New Zealand dollar remained weak today ahead of a possible Reserve Bank interest rate cut on Thursday, and as the US dollar rose on expectations of a US rate rise.

By 5pm, the kiwi was at US61.86c, down from US62.83c late yesterday afternoon but ahead of its US61.50c level earlier today.

The kiwi was down at A78.50c from A78.75c yesterday, and was also lower against the euro, yen and sterling.

Although the kiwi hit an eight-month high of US66c last Wednesday, sentiment towards the currency was negative, said Westpac currency strategist Imre Speizer.

"We think this rally in risk, this optimism, all this green shoot stuff, has just gotten way too stretched and ahead of itself, and it's looking far more likely now that the pendulum's swinging the other way," Mr Speizer said.

A high New Zealand dollar would stamp out any growth in the economy.

"(Investors) would only be buying kiwi if they thought our economy was going great guns, and our economy was going to be in a much better position in a few months' time so you want to own a bit of the action," he said.

Also making the kiwi less attractive was the fact that New Zealand interest rates were lower than Australia's for the first time in a long time.

The market was evenly split over the Reserve Bank of NZ's interest rate call, with a 25-point rate cut a definite possibility.

The US dollar rose against a basket of currencies today, although it failed to regain last week's two-week high after US jobs data, as expectations rose for a US Federal Reserve rate rise later this year.

- NZPA