The New Zealand dollar was entrenched in its range yesterday despite a warning from the Finance Minister about the rising trans-Tasman cross.
By 5pm the kiwi was at US49.47c, down from Tuesday night's close of US49.62c, while the aussie was little changed at US56.08c (US56.12c) after the Reserve Bank of Australia left interest rates unchanged.
One local dealer said the kiwi was largely unaffected by the comments yesterday from Finance Minister Michael Cullen, who was speaking in front of Parliament's finance and expenditure select committee.
Dr Cullen expressed concern that against the aussie, the kiwi was towards "the top end of the comfort zone" for New Zealand manufacturers, although he did not give specific guidance on the trans-Tasman cross.
"He didn't actually say it was too high...the interpretation was it was too high but he didn't actually mention it was at the top of a range or too high," the dealer said.
"I think if nothing's going on then it becomes a focus in a quiet market.
"We're almost back where we were when he opened his mouth - they may have helped along a little correction that had started to occur anyway against the aussie dollar," he said.
"The last time he mentioned these things he did get a little reaction but I think the timing's reasonably good - before the US Fed (interest rate decision) people who have got positions are probably already taking profit anyway."
The US Federal Reserve is announcing its decision on interest rates at 8.15am today, NZT, which is expected to be a cut by 25 basis points which could put New Zealand's yield differential in an even better light.
New Zealand's official cash rate is 5.75 per cent compared with Australia's 4.75 per cent, and the US's four-decade low of 1.75 per cent.
The kiwi's range during the day was US49.33/58c, and it was likely to trade between US49.35/70c, the dealer said.
In Asia the US dollar recovered from five-week lows against the yen but struggled to hold its gains in a market bracing for the Federal Reserve's rate-setting meeting and the outcome of US mid-term elections.
On the crosses at 5pm the kiwi was at A88.22c, off its four-year high against the aussie of A88.43c at Tuesday's close; 0.4953 euro (0.4968), 60.47 yen (60.39), 0.3171 pence (0.3186), and 0.7246 Swiss francs (0.7271).
The Australian dollar was buying $NZ1.1333 ($NZ1.1309).
The 90-day bank bill yield was at 5.92 per cent (5.91), the New Zealand dollar trade-weighted index was at 56.37 (55.48), and the monetary conditions index was at minus 172 (minus 163).
The April 2004 bonds were unchanged at 5.69 per cent, the November 2006s were at 6.03 per cent (6.00), and the November 2011s were at 6.30 per cent (6.26).
- NZPA
<i>Currency:</i> Kiwi entrenched in new range, capped under US50c
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