The New Zealand dollar edged lower yesterday as investors began to view recent heavy selling of the greenback as overdone.
By 5pm the kiwi was buying US57.37c from its local close on Tuesday of US57.77, while its Australian counterpart dipped to US64.56c (US64.82c).
"That's generally reflective of the oversold US dollar condition which has plagued the market in recent sessions. All the majors have come off, including the euro, which has dragged the kiwi lower as well," Bank of New Zealand currency strategist Sue Trinh said.
Finance Minister Michael Cullen sparked a sell-off in the kiwi on Tuesday after spelling out his discomfort with the pressure its strength placed on exporters. However, after an initial dip the kiwi appeared to have shrugged off Dr Cullen's comments.
" Cullen's comments hurt initially at the margin but it's really all about the US dollar at the moment," Ms Trinh said.
The budget was also unlikely to provide any surprises, she said.
"There are other things driving currencies at the moment and that is really what is going on in the US and with the other majors. I think the budget will be relegated to the sidelines."
Ms Trinh expected the kiwi to trade in a broad US57c to US57.70c range overnight.
"The downside presents the greater risk at the moment, but we remain medium term bulls," Ms Trinh said.
On the crosses at 5pm the kiwi was buying A88.87c (A88.95c at Tuesday yesterday's close), 66.95 yen (67.36), 35.67 pence (35.93), 0.7548 Swiss francs (0.7577), and 0.4987 euro (0.5007).
The aussie was buying $1.1253 ($1.1223).
The monetary conditions index was at plus 191 (217), the trade-weighted index was at 61.17 (61.50) and 90-day bank bill yields were at 5.45 per cent (5.45).
The February 2005 yields were at 5.07 per cent (5.09), the November 2006s were at 5.26 per cent (5.27), and the November 2011s were at 5.60 per cent (5.61).
- NZPA
<i>Currency:</i> Kiwi edges lower as Greenback seen oversold
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