KEY POINTS:
The New Zealand dollar edged closer towards US70c today after better-than-forecast current account data.
The kiwi closed near its session peak on US69.88c, up from US69.07c yesterday.
The September quarter current account worsened to $4.6 billion, compared to the June quarter deficit of $3.1b but was better than the $5 billion forecast by economists.
The annual deficit narrowed to $14.4 billion, 9.1 per cent of GDP from $15.1 billion, or 9.7 per cent of GDP, recorded in the June year.
It was the first time since March 2003 that the annual deficit had narrowed between quarters, SNZ said.
Goldman Sachs JBWere economist Shamubeel Eaqub said a net external liability position of about 60 per cent of GDP was sustainable given national income, public debt and demographics, he said.
"While a catalyst for such a correction is not clearly visible in the near term, substantial NZD depreciation and/or increase in household saving would go some way to restoring some balance in NZ's external accounts.
"The other -- more abrupt -- route could be a change in foreign investors' willingness to invest (lend) in (to) NZ."
Against the Australian dollar, the kiwi was buying A89.02c at 5pm from A88.44c yesterday. The aussie still gained on the greenback -- to US78.49c from US78.07c yesterday -- despite Australia lowering its growth forecasts due mainly to the drought.
In a mid-year update of budget forecasts, Treasurer Peter Costello foreshadowed gross domestic product growth of 2.5 per cent for 2006/07, down from the May budget forecast of 3.25 per cent, rebounding to 3.75 per cent in 2007/08.
The New Zealand trade-weighted index ended the day on 68.66 from 68.27 at the same time yesterday.
The US dollar fell against the euro overnight after data showing surprisingly strong German business sentiment bolstered the case for higher euro zone interest rates.
A separate report showing a sharp rise in US wholesale prices last month gave the greenback a brief boost, but US dollar selling resumed quickly, partly because the data was offset by last week's soft reading on US consumer prices.
While US interest rates are thought to be on indefinite hold at 5.25 per cent, markets are gearing up for another rate hike in early 2007 from the European Central Bank.
A report that German business sentiment, measured by the Munich-based Ifo research institute, hit its highest level in 15 years strengthened that view by suggesting that European companies have not been squeezed by the euro's recent gains.
The following are Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US69.88c US69.07c
NZ dlr/Aust dlr A89.02c A88.44c
NZ dlr/euro 0.5277 0.5271
NZ dlr/yen 82.50 81.44
NZ dlr/stg 35.40p 35.42p
NZ TWI 68.76 68.27
Australian dollar US78.49c US78.07c
Euro/US dollar 1.3243 1.3098
US dollar/yen 118.08 117.90
- NZPA