NZ dollar drifts lower as US dollar rises

The New Zealand dollar drifted lower today ahead of a long holiday weekend and as investors awaited developments in the international economic story.

The NZ dollar was at US74.78c at 5pm, from US74.64c at 8am and US74.99c at 5pm yesterday.

The US dollar drifted higher as investors cut long positions ahead of the Group of 20 meeting in South Korea at the weekend.

The US dollar's broad rebound from earlier losses came amid questions about the extent of expected economic stimulus measures by the Federal Reserve to boost the US economy.

ANZ bank said the higher US dollar could be put down to nervousness ahead of the G20 meeting starting today. It doubted any meaningful agreement on co-ordinated exchange rate policies would emerge.

With a long weekend approaching in New Zealand, and an interest rate decision next week by the Reserve Bank of New Zealand (RBNZ), the market drifted.

"We expect the RBNZ to hold the OCR at 3 per cent next Thursday. With Governor Alan Bollard effectively giving current market pricing of rates on hold until early 2011 the thumbs up this week, it is hard to envisage any great surprises from the announcement," Goldman Sachs & Partners New Zealand said in a preview.

The NZ dollar was down to 0.5368 euro at 5pm from 0.5390 euro at the same time yesterday and it edged down to 60.69 yen from 60.86. It was little changed at A76.29c from A76.31c yesterday.

The trade weighted index fell to 66.44 from 66.59.

- NZPA