The New Zealand dollar bounced off a fresh all-time low at 40.10USc but a break below US40c seems inevitable.
The kiwi finished at a closing low of 40.25USc from 41USc on Wednesday.
When floated in March 1985 it was at 44USc, and a year ago it was worth 52.48USc.
With the 90-day bills still on 6.66 per cent, the out-of favour monetary conditions index (MCI) went to its easiest levels ever, closing at minus 1011. This was way outside the Reserve Bank's old range of minus 500, where the bank would be looking hard at interest rates. The MCI is no longer used as the principal indicator of monetary policy.
The story behind its weakness remains unchanged - the massive current account deficit, worries about Government policy, a fragile economy and, above all, the powerful US dollar.
But BNZ forex manager Greg Ball noted that dayside trading yesterday in New Zealand differed in that the kiwi carried on to new lows alone, without the company of the Australian dollar and the euro. "The reason we saw the kiwi lower was very much flow-driven. One of the Wellington banks got on to a decent flow and pushed it down to that 40.15USc level."
And, as usual, market liquidity was such that any move got exaggerated.
Mr Ball said the kiwi would break into 39USc territory overnight.
The market is standing by for today's current account data, expected to show the deficit at 7.1 per cent of GDP.NZPA
<i>Currency:</i> Kiwi taps fresh all-time lows
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