The New Zealand dollar today lost yesterday's gains as the US dollar rallied on mildly hawkish comments from its new Federal Reserve chairman.
Local Produce Price Index data, while showing inputs inflation running strongly, also revealed outputs inflation much lower than expected. That pointed to businesses being squeezed on margins, economists said, and was further gloomy news for the economy.
The kiwi closed on US67.35c, from US67.75c at 5pm yesterday.
Analyst 4Cast said data fitted anecdotal and survey evidence that New Zealand business was being squeezed by a lack of pricing power and increased costs. It said any currency weakness would add to those pressures.
"The price dynamic is such that inflation pressures will likely remain contained so long as demand is so low," 4Cast said.
Both the inputs and outputs indexes posted their seventh consecutive increases.
The kiwi lost ground on all its cross rates. It ended at A91.27c against the aussie from A91.34c yesterday. The Australian dollar closed at US73.80c against the greenback compared to its US74.05c close here yesterday.
In his first testimony to Congress since becoming Federal Reserve chairman, Ben Bernanke indicated more interest rate increases could be needed to contain inflation pressures in a relatively strong US economy.
The following are Reuters currency rates:
5pm today 5pm Wednesday
NZ dlr US67.35c US67.65c
NZ dlr/Aust dlr A91.27c A91.34c
NZ dlr/euro 0.5670 0.5675
NZ dlr/yen 79.42 79.68
NZ dlr/stg 38.70p 38.99p
NZ TWI 69.58 69.78
Australian dollar US73.80c US74.05c
Euro/US dollar US1.1881 US1.1922
US dollar/yen 117.93 117.76
- NZPA
<EM>Currency:</EM> Dollar slips after hawkish comments
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