5.49pm
Comments by Finance Minister Michael Cullen that the kiwi dollar had peaked, or was about to, sent the curency down nearly half a cent today.
Dealers doubted the comments would have any lasting effect, but they were used today as a excuse to sell the currency.
It fell to US68.71c from an opening of US69.20c before recovering to close at US68.87c. It had closed yesterday at the same level as this morning's opening.
Dr Cullen said the the New Zealand dollar appeared to be either at or nearing its peak. It was unclear against which currency he was referring to. The kiwi lost similar ground against the aussie.
In a speech to the Federated Farmers National Council in Wellington, he said "the persistent strength of the New Zealand dollar" and the rise in oil prices are 'concerns' for the New Zealand economy.
Both were "showing signs of being at or near their peak", Dr Cullen said.
The kiwi has increased more than 32 per cent against the US currency since the beginning of 2003 and has also risen nearly 12 per cent against the Australian dollar since the beginning of 2002.
Dr Cullen said high oil prices were "part of a broader surge in commodity prices including dairy, lamb and beef prices sustained by a combination of high demand and some supply constraints in competing countries".
BNZ currency strategist Sue Trinh said the market was waiting on the US Federal Open Market Committee (Fomc) to meet on Thursday morning NZT, when it is expected to raise interest rates by 25 basis points to 2 per cent.
Tomorrow's jobs data was also important. The jobless rate is expected to drop to 3.9 per cent and employement growth is picked at 2.5 per cent for the quarter. Any numbers stronger than that could see the Reserve Bank rethink its pause on interest rates announced last month.
At 5pm today the euro was buying US$1.2896 (from US$1.2925 at 5pm last night), the Australian dollar was buying US76.03c (US75.72c) and the greenback was buying 105.82 yen (105.56 yen).
On the crosses the kiwi was buying A90.59c (A91.40c) 0.5342 euro (0.5355 euro) 37.13 British pence (37.31) 72.90 yen (73.06 yen) and 0.8153 Swiss francs (0.8177).
The NZ dollar trade-weighted index was at 67.66 (67.97) and the monetary conditions index was at plus 824 (846).
On the money market, 90-day bank bill yields were on 6.75 per cent against 6.74 per cent yesterday.
February 2006 bond yields were unchanged at 6.25 per cent, July 2009s were at 6.04 per cent (6.06) and April 2013s were at 6.11 per cent (6.10).
- NZPA
<i>Currency:</i> Cullen comments send kiwi down
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