The New Zealand dollar continued to fall sharply against the Australian unit today, but made up some late ground against the greenback on gloomy war talk.
By 5pm the kiwi firmed to US54.89c after spending most of the day around US54.65c, but still lower than US54.90c at yesterday's close. The Australian dollar hit US60c for the first time in 10 days amid talk that US officials believed the Iraqi war could last for months. It closed locally yesterday at US59.72c.
A weakening US dollar dropped from 120.07 yen this morning to 119.79 yen (119.93 at yesterday's close) and the euro rose to $US1.0706 from $US1.0683 ($US1.0656).
Dealers back home said it had been a reasonably busy day but most of the focus had been on New Zealand's narrowing cross rate with the aussie dollar.
The kiwi-aussie cross had fallen around A1.5c this week, closing at A91.46c (A91.94c) while the Australian dollar was buying $NZ1.0934 ($NZ1.0878).
Bank of New Zealand chief currency dealer Mike Symonds said there seemed to be increasing focus on whether the strong New Zealand dollar was choking the economy, and whether interest rates would be cut earlier.
"A lot of people are now suggesting that the relative interest rate differential which is clearly in New Zealand's favour, (will) narrow," he said.
Although it had little effect on the kiwi, today's December current account and trade deficit was slightly better than expected at $1.892 million. Relatively strong gross domestic product figures for the December quarter are expected when they are released tomorrow.
"The market's real focus is on data we're getting going forward rather than data from late last year," Mr Symonds said.
The kiwi was expected to trade between US54.60c and US55c tonight.
On other crosses, it was buying 0.5126 euro (0.5154), 34.82 pence (34.85), 0.7570 Swiss francs (0.7589) and 65.71 yen (65.84).
On the money market, 90-day bills were steady at 5.86 per cent, the monetary conditions index was at plus 182 (plus 194), and the trade-weighted index was at 60.58 (60.74).
Among the bonds the April 2004s were at 5.48 per cent (5.56), the November 2006s were at 5.59 per cent (5.67) and the November 2011s were at 6.04 per cent (6.12).
- NZPA
<i>Currency:</i> Kiwi continues to fall against Aussie
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