NZ dollar goes full circle

The New Zealand dollar ended the week pretty close to where it started it even though the central bank tried to talk the currency down.

The NZ dollar was at US63.85c at 5pm, up from US63.02c at the same time yesterday. It was US64.10c at 8am on Monday.

Reserve Bank of New Zealand (RBNZ) governor Alan Bollard this week warned that buyers of the NZ dollar on the expectation of a strong recovery may end up being disappointed.

"Overall, the RBNZ stands to be most surprised on the NZ dollar. The RBNZ's June Monetary Policy Statement forecasts were based on a very low exchange rate outlook," said ASB economists.

They and other economists are arguing that the central bank may have to cut its official cash rate further if rises in the currency and wholesale interest rates continue.

TD Securities senior strategist Annette Beacher said the RBNZ was "jawboning with a feather".

The NZ dollar has been hostage to moves in the US dollar but attention is turning to New Zealand gross domestic product data for the March quarter due next Friday.

The economy is expected to be in recession for a fifth quarter. Balance of Payments data for the March quarter is due a day earlier on Thursday.

The NZ dollar was firm against a range of currencies today, and this helped lift the trade weighted index to 60.53 from 59.82 yesterday.

It rose to A79.65c from A79.59c yesterday and to 0.4590 euro from 0.4523 yesterday.

It was at 61.70 yen from 60.30 yen yesterday.

- NZPA