The New Zealand dollar eased back in line with other currencies against a firmer US dollar today, but markets ignored fresh warnings from Reserve Bank Governor Alan Bollard that the kiwi was vulnerable to a sharp sell-off.
The kiwi closed at US68.65c, having climbed to US68.88c overnight from its US68.50c close yesterday.
In its half yearly financial stability report today, Dr Bollard again warned of economic imbalances in reference to the current account deficit and the heavily indebted household sector.
He said if world prices for New Zealand export commodities fell, "the New Zealand dollar exchange rate may fall further and faster than expected".
However, there was no reaction in the market.
"There was nothing new," said ANZ Investment Bank senior dealer Mark Elliott. "There wasn't any reaction in the market."
RB deputy governor Adrian Orr said the bank was ready to intervene in the foreign exchange market if birdflu hit New Zealand.
"We'll be making sure ... that our foreign reserves will be poised and ready if the foreign exchange markets become dysfunctional and we have to be providing some type of price making role through that," Mr Orr said.
The kiwi remained strong on most of its crosses, rising over to 40p against sterling for the first time since October 1997.
Despite the Australian dollar holding steady at US73.18c against the US unit, the kiwi made ground - to A93.80c from A93.62c.
Rates:
5pm today 5pm Thursday
NZ dlr US68.65c US68.50c
NZ dlr/Aust dlr A93.80c A93.62c
NZ dlr/euro 0.5852 0.5865
NZ dlr/yen 81.70 81.40
NZ dlr/stg 39.95p 39.87p
NZ TWI 71.42 71.32
Australian dollar US73.18c US73.18c
Euro/US dollar US1.1731 US1.1680
US dollar/yen 119.12 118.87
- NZPA
<EM>Currency:</EM> Dollar shrugs off Bollard's warning
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