The New Zealand dollar continued its downwards spiral yesterday, falling below the 43USc mark and sending market watchers into a frenzy.
The kiwi closed on local currency markets at 42.89USc, from 43.39c at Wednesday's 5 pm close. On Tuesday it was at 45c.
July trade figures showed a deficit of $330 million, compared with expectations of $30 million, confirming the kiwi as the worst performer among Western currencies.
Finance Minister Michael Cullen faced questions in Parliament after the dollar slumped to a 15-year low of 43.35USc.
He said the main reason for the level of the dollar was recognition by international markets of the "very bad" current account deficit. "Nobody wants to see the level of the dollar at what it was in 1996 when the tradeable sector was being crucified," he said.
"I think it is clear that at present the dollar has been oversold and is undervalued," said Dr Cullen.
The trade-weighted index, which measures the kiwi against the currencies of our major trading partners, continues to find record lows, falling yesterday to 48.66 (49.45).
The currency was also making itself felt in other markets.
Cavill White Securities equities dealer Alan Wills said all eyes would be on the currency's movements overnight (last night) to see what direction it would give to local equities.
- NZPA
<i>Currency:</i> Kiwi gets another pounding
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