The kiwi lost another 1 per cent today against the greenback and weakened sharply against other currencies.
Foreign exchange traders were bracing themselves for tomorrow's overseas accounts that are likely to show a record balance of payments deficit.
The kiwi closed below US62c for the first time since June 2004, ending on US61.90c in frenetic late trading, compared with yesterday's US62.70c close.
The damage was almost as great against the Australian dollar with the kiwi buying just A86.42c against A87.03c yesterday.
There was also a sharp fall against the euro, yen and sterling while the trade-weighted index dropped from 64.54 yesterday to 64.32 -- its lowest since October 2004.
The kiwi has plunged over 6 per cent this month and 12 per cent this year against the US dollar and 10 per cent this year on the TWI.
Economists expect the current account deficit to have ballooned to $13.9 billion in 2005 - equivalent to 9 per cent of GDP - when the data is released tomorrow.
The kiwi was exacerbated by general US dollar strength. The dollar was rising amid growing confidence the Federal Reserve would raise interest rates at least twice more in the next few months.
This confidence was spurred by a combination of optimistic comments on the US economy by Fed chairman Ben Bernanke and a surprisingly big rise in February core US producer prices.
A Wellington dealer said the kiwi broke key support levels.
He said it was more a US dollar story and most currencies were weakening. The move against the kiwi was exaggerated because of its trend this year. The kiwi was friendless.
"There's no real sign of demand from anywhere," he said.
ANZ Investment Bank strategists said the Reserve Bank would be wary of the inflation consequences of the 5c per litre rise in petrol prices this week. The currency's fall was likely to put more pressure on fuel prices.
"It (the RB) has no scope to absorb the continued inflation pressure and has signalled in the March monetary policy statement that it is running a highly risk averse inflation strategy."
The strategists said the lower and more sustained the kiwi's dip, the greater the prospect the easing cycle would be deferred until December.
Rates:
5pm today 5pm Tuesday
NZ dlr US61.902c US62.70c
NZ dlr/Aust dlr A86.42c A87.03c
NZ dlr/euro 0.5123 0.5166
NZ dlr/yen 72.60 72.52
NZ dlr/stg 35.42p 35.78p
NZ TWI 64.32 64.54
Australian dollar US71.64c US72.03c
Euro/US dollar US1.2088 US1.2135
US dollar/yen 117.27 116.56
- NZPA
<EM>Currency:</EM> Dollar slumps below US62C
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