The New Zealand dollar toppled from a one-month high to a 5-day low in the space of 24 hours, after an influential survey showed business confidence has plummeted to a 35 year low.
Yesterday, the kiwi hit a month high of US70.02c, but by 5pm today the local unit was buying US69.47c compared with yesterday's US69.91c close.
Earlier in the day, the kiwi tumbled through resistance at US69.50c to a low of US69.20c, following the release of the Institute of Economic Research's (NZIER) quarterly survey of business opinion, showing a net 61 per cent of firms expected business conditions to deteriorate in the next six months, compared with a net 32 per cent of pessimists in the previous quarter.
The seasonally adjusted figure was even more dire with a net 71 per cent pessimistic against 34 per cent in October. Not for 35 years has the economic mood been so downbeat.
The survey saw some economists call for the Reserve Bank to not just halt its tightening cycle at its formal review of interest rates next week but to begin cutting immediately to stave off economic meltdown.
New Zealand's official cash rate is currently at 7.25 per cent -- the highest in the industrialised world -- and that high yield has underpinned the kiwi in the past year.
Tomorrow's Statistics New Zealand report on fourth quarter consumer price inflation (CPI) should give markets a better fix on whether the Reserve Bank will hike interest rates again next week.
Economists expect the CPI to have risen 0.8 per cent on the third quarter and 3.2 per cent on a year ago.
At 5pm the Australian dollar was buying US75.37c against US75.62c yesterday and the kiwi cross rate eased to A92.13c from A92.44c.
The following are Reuters currency rates:
5pm today 5pm Monday
NZ dlr/US dlr US69.47 US69.91
NZ dlr/Aust dlr A92.13 A92.45
NZ dlr/euro 0.5736 0.5755
NZ dlr/yen 79.85 79.79
NZ dlr/stg 39.32 39.35
NZ TWI 70.72 70.97
Australian dollar US75.37 US75.62
Euro/US dollar US1.2113 US1.2153
US dollar/yen 114.95 114.15
- NZPA
<EM>Currency:</EM> Investors dump kiwi on shock confidence plunge
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