The New Zealand dollar took a dive this morning after data showed the current account deficit was worse than expected, but had retraced slightly by the end of the local session.
The September quarter annual deficit was $8.23 billion, or 5.8 per cent of GDP against the record 6.9 per cent in June 1997. The September quarter deficit was $4.22 billion, or $3.09 billion on a seasonally adjusted basis. Economists had forecast an unadjusted deficit of $3.5 billion.
After opening the local session at US71.70c, the kiwi dropped to US71.30c shortly after the data release at 10.45am. By the 5pm close the kiwi had recovered slightly to US71.58c.
The kiwi/aussie cross rate was also hit, with the kiwi dropping nearly a cent to A93c shortly after the data release, after opening at A93.92c. It did not retrace as much as the kiwi/greenback cross and by 5pm was at A93.06c.
BNZ economist Stephen Toplis said the current account would increasingly become the focus of investors and at some point could be the catalyst for a re-rating of the New Zealand dollar.
"While we all rush around talking about the US current account balance and how much it matters, if current account balances matter, then New Zealand has some interesting question marks over the long-term stability of its currency," he said.
More potentially currency-moving data is due out tomorrow with the release of Gross Domestic Product figures, which are expected to show a growth rate of 4.6 per cent.
At 5pm today the euro was trading at US$1.3395 (from US$1.3323 at 5pm yesterday), and the greenback was at 103.90 yen (104.45).
On its other crosses, the kiwi was at 0.5336 euro (0.5373), 36.75 British pence (36.90), 74.31 yen (74.70), and 0.8217 Swiss francs (0.8273).
The trade-weighted index was at 69.05 (69.34), while the monetary conditions index was at plus 924 (945).
On the money markets, 90-day bank bill yields were unchanged at 6.74 per cent, as were February 2006 bonds were at 6.33 per cent (6.29), July 2009s were at 6.00 per cent (5.95) and April 2013s were at 5.96 per cent (5.91).
- NZPA
<EM>Currency:</EM> Kiwi falls as current account deficit grows
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