The New Zealand dollar reached a 22-month low of US60.55c around mid-afternoon today before recovering a little to be at US60.91c by 5pm.
It had started the day slightly above US61c -- still almost half a cent below Friday's local close of US61.54c -- having crashed to US60.85c in offshore trading on Friday night.
During today the kiwi also slipped against the euro, British and Japanese currencies, falling below 71 yen by the end of the day.
The TWI was down from 63.27 at 8am today to 63.01 this evening.
The kiwi was finding some support from a weaker US currency which slipped as investors waited to see whether the Federal Reserve would lift the official US interest rate to 4.75 per cent from 4.5 per cent at this week's two-day meeting. It would be the 15th straight increase in US interest rates.
The kiwi showed limited reaction to merchandise trade figures out today which put the February trade deficit at $257 million, pushing the annual shortfall slightly higher to $7.2 billion.
Despite the worsening gap between imports and exports, some analysts saw indications the trade deficit could have peaked, with the annual shortfall actually contracting slightly if aircraft were removed from the trade figures.
Figures out last Friday showing the economy contracted 0.1 per cent in the December quarter, instead of growing 0.2 per cent as forecast, were thought to be still filtering through the market.
ANZ Investment Bank strategists said the data had caused local markets to sharply revise their expectations for the timing of rate cuts by the Reserve Bank.
The market now attached an 80 per cent probability to a rate cut by the July 27 official cash rate review.
ANZ said this was an over-reaction.
"We don't see much scope for lower interest rates before inflation is showing clear signs of turning the corner -- this looks like being a September, rather than July, story."
Rates:
5pm today 5pm Friday
NZ dlr US60.91c US61.54c
NZ dlr/Aust dlr A86.03c A86.62c
NZ dlr/euro 0.5054 0.5145
NZ dlr/yen 70.93 72.62
NZ dlr/stg 34.86p 35.48p
NZ TWI 63.01 63.92
Australian dollar US70.78c US71.11c
Euro/US dollar US1.2051 US1.1968
US dollar/yen 116.48 117.94
- NZPA
<EM>Currency:</EM> Kiwi reaches 22-month low
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