The New Zealand dollar continued to unravel hard-won gains made so far this year yesterday, sinking to two-month lows beneath US47c.
By 5pm the kiwi was at US46.95c - its lowest point since May 21 - compared with US47.43c at Tuesday's local close. The unit traded between US46.90c and US47.45c throughout the day.
"There has just been a distinct lack of solid buying interest in the kiwi, with the view that the unit may have a bit more downside potential," Bank of New Zealand forex manager Mike Symonds said.
"Some of the people that are natural buyers are just waiting patiently rather than entering the market at this point."
The Australian dollar also lost ground yesterday, trading at US53.93c by 5pm from US54.24c at Tuesday's close. The euro dipped below US99c early in the session, before closing at US99.08c.
Dealers said commodity currencies were feeling the greenback's heat , on concerns that stock market weakness would hit global growth.
The unwinding of hedges had also hurt the currencies, amid talk that the falling US stock markets had bottomed out.
"The nature of New Zealand dollar and Australian dollar selling is little changed - offshore investors leaving growth currencies, technically-driven traders seeking a deeper correction, and fund managers adjusting hedges as offshore bourses decline," said Westpac currency strategist Johnathan Bayley.
Kiwi has surged since February when it was trading at around NZ42c. Buoyed by interest rate differentials, the unit rose quickly and steeply to peak just above US50c in late June.
Since then it has consolidated in a US48c to US49c range.
Mr Bayley said that kiwi had cleanly broken out of that range and was set to continue lower in the near term, driven by technical and global considerations, to the nearest technical target of US46.80c.
"The currency's ability to end its correction here depends largely on the evolution of world equity markets and whether they stabilise risk appetite or continue to drive repatriation," he said.
Dealers expected the kiwi to range between US46.75c and US47.15c overnight.
The kiwi lost ground on all the major crosses yesterday and by 5pm was buying A87.06c (A87.45c at Tuesday's close); 55.03 yen (56.57), 30.01 pence (30.19), 0.6879 Swiss francs (0.6927) and 0.4739 euro (0.4754).
The aussie was buying $NZ1.1490 ($NZ1.1440).
On the money market, 90-day bills were at 5.99 per cent (6.02), the trade-weighted index was at 53.47 (53.85) and the monetary conditions index was at minus 430 (minus 392).
On the debt market, the April 2004 bonds were at 5.56 per cent (5.70), the November 2006 bonds were at 6.16 per cent (6.24), and the November 2011 bonds were at 6.41 per cent (6.49).
- NZPA
<i>Currency:</i> Kiwi sheds hard-won gains
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