The New Zealand dollar was pushed lower yesterday to finish at a two week low, below US42c.
At 5pm the kiwi traded at US41.96c, well below Wednesday's close of US42.24c. The Australian dollar was also weaker, at US51.41c (US51.64c).
One local dealer said the kiwi had hit a low of US41.90c during the day, and risen to a high of US42.12c before backing off when the Australian dollar came under pressure.
"The Aussie hit some stops about US51.30c and sank down to US51.26c before retracing to US51.45c," the dealer said.
"I think the key area here is if this US51.25c holds in the aussie and US41.90c in the kiwi - if we see a substantial break in the aussie tonight we could possibly be back into the US41.20/90c trading range that we had just before Christmas."
The December quarter Consumer's Price Index released yesterday provoked no reaction, showing that lower fuel prices kept New Zealand's inflation rate in check for the quarter.
Inflation, as measured by the CPI, rose by 0.6 per cent in the three months ending December 2001 - just one basis point higher than private sector forecasts.
That figure pulled the annual inflation rate down to 1.8 per cent - bang on market expectations and much lower than the 4 per cent rate recorded a year earlier.
In the US, the dollar was hurt at the margin by a sharp fall on Wall Street, although there was better news after the bell from Compaq Computers and chip maker Advanced Micro Devices.
But analysts noted that in the last two days Intel had announced plans to slash capital spending by 25 per cent, General Motors intended to shave 11 per cent of its spending plans and energy group Calpine chopped its capital expenditure by $US2 billion ($NZ4.8 billion).
The corporate anecdotes were a bad omen for economic growth in the coming year, economists said.
On the crosses at 5pm the kiwi was buying A81.60c (A81.77c at Wednesday's close), 55.36 yen (55.52), 29.22 pence (29.34), 0.6962 Swiss francs (0.7045) and 0.4750 euro (0.4786). The Australian dollar was buying $NZ1.2255 ($NZ1.2223).
The Trade Weighted Index was at 50.86 (51.13), 90-day bank bills were steady at 4.86 per cent and the monetary conditions index was at minus 792 (minus 767).
On the debt market the March 2002 bonds were steady at 4.73 per cent, the April 2004s were at 5.59 per cent (5.55), the November 2006s were at 6.14 per cent (6.11), and the November 2011s were unchanged at 6.44 per cent.
- NZPA
<i>Currency:</i> Kiwi sinks below US42c
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