The New Zealand dollar was pounded to multi-month lows against the currencies of all its major trading partners today, with its trade-weighted index touching to an 18-month low.
The TWI fell to 67.23, a level not seen since September 2004. It closed yesterday at 68.26.
The kiwi also fell to an 18-month low against the US dollar, ending the local session at US65.35c against US66.63c yesterday. The one cent fall against the aussie to A88.33c is a 20-month low and the toughs against the euro and sterling were 14-month lows.
ANZ Investment Bank strategists said the kiwi had been pushed lower by US investment banks,
"With offshore sentiment increasingly moving towards higher interest rates in Japan, the US, and Europe, the cash and carry trade in New Zealand is looking increasingly unattractive," ANZ said.
"It's a continuation of what we have seen for the first couple of months of the year," said an Auckland dealer.
The New Zealand Institute of Economic Research lowered its growth forecast to 0.7 per cent the March 2007 year from previous forecast of 0.9 per cent. New forecast compares with Treasury's 1.5 per cent and RBNZ's 2 per cent projections.
Yesterday's weak housing data was the trigger for the latest round of selling and the market is on edge ahead of Thursday's Reserve Bank quarter review of monetary conditions. The bank is universally expected to leave interest rates unchanged and the main interest is how hard a line the bank will take against inflation.
In contrast to New Zealand, interest rates in the US, Europe and, possibly Japan, are all seen moving higher.
The US dollar rose against the yen for a third straight day, extending gains as more investors come round to the view the Bank of Japan won't raise interest rates anytime soon.
The US currency drew additional support after St. Louis Federal Reserve President William Poole said late on Monday that the Fed might have to raise US rates further if economic growth is consistently strong.
Rates:
5pm today 5pm Monday
NZ dlr US65.35c US66.63c
NZ dlr/Aust dlr A88.33c A89.40c
NZ dlr/euro 0.5457 0.5520
NZ dlr/yen 76,72 77.89
NZ dlr/stg 37.37p 38.88p
NZ TWI 67.23 68.26
Australian dollar US73.98 US74.54c
Euro/US dollar US1.2001 US1.2071
US dollar/yen 117.42 116.89
- NZPA
<EM>Currency: </EM>Dollar plunges over 1c against Aussie
AdvertisementAdvertise with NZME.