5.22pm
The kiwi dollar continued to scurry lower today, particularly against the Australian dollar, following the Reserve Bank's decision yesterday to halt its tightening cycle.
The kiwi finished at A91.50c against the aussie today compared with yesterday's A92.04c close, which in turn was a cent lower than before the RB statement yesterday morning.
Dealers said the move could be part of a substantial move down in the kiwi-aussie cross rate, something that most exporters will welcome.
ANZ Investment Bank dealer Mark Elliott said there had been a significant unwinding of kiwi-aussie positions with the aussie cross rate deemed to be highly sensitive to interest rate differentials.
"The trend of widening differentials in New Zealand's favour has been halted and the market, being forward looking, has taken that as a cue to exit long kiwi-short aussie positions," Mr Elliott said.
"I think it will continue. Quite possibly this is a significant turn in that cross."
The move down against the US dollar was less pronounced with the kiwi finishing on US68.15c from its US68.40c opening and against the US68.88c close yesterday.
Dealers said the downtrend was sparked by the RB's decision, but was kicked along by a rebound in the US unit. However, while other currencies such as the Australian dollar, euro and pound recovered, the kiwi, languished.
BNZ currency strategist Sue Trinh said sentiment towards the kiwi had soured significantly.
China raised its interest rates last night, taking the market by surprise -- signalling that it wanted to take the heat out of its economy.
"That induced a massive sell-off in commodity currencies, which took the kiwi down to US67.80c at one point," Ms Trinh told NZPA today.
The Australian dollar finished at US74.52c against its US74.84c close here yesterday. The euro was at US$1.2740 (US$1.2722), and the greenback was buying 106.15 yen (106.32).
The kiwi lost ground on all the other crosses. At the close, it was buying 0.5350 euro (0.5414), 37.23 British pence (37.60), 72.34 yen (73.22), and 0.8190 Swiss francs (0.8302).
The NZ dollar trade-weighted index ended on 67.48 against 68.18 yesterday and the monetary conditions index closed on plus 807 (861).
On the money market, 90-day bank bill yields eased a pip to 6.72 per cent. Bond yields also fell with February 2006 bond yields at 6.17 per cent (6.19), July 2009s were at 6.02 per cent (6.06), and April 2013s were at 6.03 per cent (6.06).
- NZPA
<i>Currency:</i> Dollar down against Aussie in wake of RB decision
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