NZ dollar drops under US73c

Subdued data today, including a dip in retail sales, weighed on the New Zealand dollar as the market further discounted an imminent interest rate rise.

The kiwi had pushed earlier to its highest level against the faltering greenback in nearly six weeks as investors continued to show an appetite for risk.

However, it lost half a US cent today, hammered down from a high this morning around US73.44c after the release of soft retail sales figures for July, followed by data showing the housing market was not gathering steam yet.

The Reserve Bank of New Zealand releases its next interest rate decision on Thursday, and the Canterbury earthquake and soft economic data have dampened expectations to a unanimous no-change in the current 3 per cent Official Cash Rate.

The recent events have overshadowed concerns about inflation pressures expected later this year.

By 5pm, the kiwi was at US72.91c, little changed from yesterday's late afternoon level.

Against the aussie, the kiwi had sunk to A78.11 from A78.40c at 5pm yesterday. It had spiked up to around A78.70c at one point overnight.

The kiwi eased to 0.5659 euro from 0.5699 yesterday, to 60.78 yen from 61.36 yen, and to 47.22 pence from 47.31p.

The trade weighted index fell to 60.78 from 61.36 late yesterday.

The US dollar hit a new 15-year low against the yen today, amid more political uncertainty as the prime minister Naoto Kan faces a challenge from political heavyweight Ichiro Ozawa.

The greenback has also weakened significantly against other currencies, particularly the euro which is benefiting from increasing investor risk appetite.

- NZPA