The New Zealand dollar popped above US49c yesterday as United States markets continued to wallow in dodgy accounting scandals.
By 5pm the kiwi was at US49.10c from US48.91c at Monday's close. Its Australian trading partner rallied to US56.44c (US56.30c).
Dealers said the greenback came under further pressure after drugmaker Merck become the latest American corporate to admit it had inflated its revenue.
That knocked 1.12 per cent off the Dow Jones industrial average to 9274.90 while the Nasdaq composite index fell nearly three per cent to 1405.61, dragging the US unit down with it.
Bank of New Zealand forex manager Mike Symonds said the kiwi had traded as high as US49.15c in the overnight session on the back of Merck's admission.
"This is certainly not a kiwi move, it's very much a US dollar story."
Even weaker than expected local retail sales data out yesterday failed to ruffle the kiwi. Statistics New Zealand said retail sales declined by 1.2 per cent in May, against expectations of a 0.7 per cent fall.
Economists said a marked decline in New Zealanders' retail spending was to be expected after strong till takes so far this year.
Dealers picked the kiwi to trade between US49c and US49.40c overnight.
Meanwhile, WestpacTrust yesterday released an extremely upbeat outlook for the kiwi, predicting the unit is poised to storm US60c by June 2003.
"New Zealand is just one of many countries that offers higher interest rates, yet with good credit ratings, reasonable near term growth prospects, and the potential to gain from currency appreciation," chief economist Adrian Orr said.
On the crosses at 5pm the kiwi was buying A87.01c (A86.88c), 58.35 yen (58.27), 31.90 pence (31.91), 0.7308 Swiss francs (0.7284) and 0.4972 euro (0.4961).
Against the kiwi, the aussie was buying $NZ1.1495 ($NZ1.1510).
On the money market 90-day bills were at 6.05 per cent (6.06), the trade-weighted index was at 55.73 (55.61) and the monetary conditions index tightened to minus 216 (minus 227).
On the debt market the April 2004 bonds were at 5.97 per cent (6.00), the November 2006 bonds were at 6.41 per cent (6.34), and the November 2011 bonds were at 6.68 per cent (6.67).
- NZPA
<i>Currency:</i> Kiwi tops US49c on US woes
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