The New Zealand dollar edged down yesterday, confirming a view that the kiwi was underperforming against United States dollar weakness.
At 5pm the kiwi was at US48.42c compared with US48.81c at Tuesday's local close, trading in a tight 20/30 point range. Its Australian counterpart was also lower at US55.61c (US56.28c).
Increasing fears about the global equities outlook have hampered the kiwi and the aussie's upward progress particularly against the yen and euro, said Bank of New Zealand currency strategist Stu Ritson.
"The kiwi in particular looks like it's going to test the US48c mark. In recent sessions the kiwi hasn't been able to get on the topside during periods of US dollar weakness, which is a little concerning."
Mr Ritzon said that even though the fundamental outlook for the global economy was still bright, the current negative sentiment could settle in for some time. And despite their attractive interest rates, the kiwi and aussie were still suffered regarded as risky and peripheral currencies.
"The kiwi's lost some of its lustre -- it's done very well over the first half of 2002 and maybe we need to consolidate a while."
Offshore, comments from Federal Reserve Chairman Alan Greenspan that the US economy has held up "remarkably well" failed to snap widespread pessimism. The Standard and Poor's 500 index closed at its lowest since August 1997.
Mr Ritson expected the kiwi to trade between US48.10/50c last night.
On the crosses at 5pm the kiwi traded at A87.06c (A86.74c at yesterday's close), 56.15 yen (56.74), 30.75 pence (31.04), 0.7014 Swiss francs (0.7114) and 0.4786 euro (0.4844).
Against the kiwi, the aussie was buying $NZ1.1486 ($NZ1.1526).
On the money market, 90-day bills were at 6.04 per cent (6.03) and the monetary conditions index was at minus 333 (minus 293).
On the debt market, the April 2004 bonds were at 5.75 per cent (5.84), the November 2006 bonds were at 6.22 per cent (6.21), and the November 2011 bonds were at 6.56 per cent (6.55).
- NZPA
<i>Currency:</i> Kiwi puts in lacklustre performance against USD
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