NZ dollar retreats further from US77c

The New Zealand dollar retreated further below US77c, a level it last reached more than 27 months ago, as the US dollar posted small gains and after the Reserve Bank of Australia raised interest rates.

The kiwi peaked early today above US76.90c then declined to US76.47c by 5pm, compared with US76.60c at 5pm yesterday.

Against the Australian dollar, the kiwi plunged late in the day to A76.64c, having traded at A77.54c late yesterday afternoon.

The RBA lifted rates by 25 basis points to 4.75 per cent, saying early modest tightening was prudent because the risk of inflation was rising over the medium term.

However, the decision surprised some in the market as inflation pressures had eased and credit growth was weak.

The aussie firmed to US99.80c after the announcement, a US cent higher than 5pm yesterday.

The NZ dollar was a touch weaker against euro, sterling and yen, and the trade weighted index eased to 67.52 from 67.73 yesterday.

Dominating domestic data today was news that wages had increased faster than expected in the September quarter, raising some inflation concerns.

The US dollar inched higher after unexpectedly strong US manufacturing data, although its gains were seen as limited ahead of a Federal Reserve meeting. The US central bank is expected to announce about $500 billion in further monetary easing to help underpin the weak US economy.

- NZPA