The New Zealand dollar continued to track lower today as an easing in the inflation rate all but ruled out another interest rate hike next week.
The kiwi closed at US68.87c, more than half a cent below yesterday's US69.47c close.
Statistics New Zealand figures out today showed consumer price inflation (CPI) rose 3.2 per cent in the year to December, down from a five-year high of 3.4 per cent in the year to September.
The 0.7 per cent December quarter rise was below the 0.8 per cent average forecast of economists and the Reserve Bank's (RB) 0.9 per cent prediction.
Coming on top of NZIER's survey yesterday showing a collapse in business confidence to a 20-year low, indicating risks of an economic recession, today's news increases the pressure on the RB to not just hold rates at next week's review, but to contemplate cutting them.
New Zealand's high interest rates have maintained the kiwi's position as a yield play in the past year, but that could be about to change.
The Australian dollar eased to US74.91c from US75.37c. On the kiwi-aussie cross, the New Zealand dollar slipped to A91.89c from A92.13c.
"It's clear that in terms of fundamental bias in terms of kiwi versus its major rivals, in this case the aussie, we are going to see kiwi in time weaken," Bank of New Zealand chief dealer, Mike Symonds, said.
The following are Reuters currency rates:
5pm today 5pm Tueday
NZ dlr/US dlr US68.87 US69.47
NZ dlr/Aust dlr A91.89 A92.13
NZ dlr/euro 0.5688 0.5736
NZ dlr/yen 79.57 79.85
NZ dlr/stg 39.01 39.32
NZ TWI 70.24 70.72
Australian dollar US74.91 US75.37
Euro/US dollar US1.2100 US1.21513
US dollar/yen 115.60 114.95
- NZPA
<EM>Currency:</EM> Kiwi continues to track lower
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