The New Zealand dollar stabilised today after loosening its grip on multi-year highs around US55c overnight.
The kiwi slumped to US54.30c in offshore trading, a full cent lower than near three-year highs reached on Monday. By 5pm it was at US54.78c from last night's close of US54.90c .
Its Australian counterpart improved a touch to US58.97c (US58.90c). On the Australian/kiwi cross the local unit eased to A92.93c from last night's A93.25c.
"It's been quiet considering the move overnight," one local dealer said.
"The kiwi's traded a narrow range of US54.58c to US54.82c."
The dealer said the ki wi was experiencing a much-needed consolidation following the recent rapid gains.
"It got a little bit ahead of itself."
Despite today's retracement, the kiwi could trade higher overnight as the US dollar continued to feel the heat of war talk, the dealer said.
In offshore trade the US dollar fell to fresh three-year lows on the euro and four-year lows versus the Swiss franc after US President George W Bush said it was "clear" Iraq was not disarming, raising the prospects for war.
At 5pm the greenback fell to 118.12 yen from 118.76 yen at yesterday's close, while the euro strengthened to $US1.0733 ($US1.0655). The dealer picked the kiwi would range between US54.35c and US54.90c overnight, ahead of an interest rate announcement by New Zealand's Reserve Bank at 9am tomorrow.
The bank is expected to leave the Official Cash Rate at 5.75 per cent, although the accompanying statement could be doveish in tone - pointing to a rate cut in the coming months - the dealer said.
"That may get the market moving," he said.
At 5pm the trade-weighted index, which measures the kiwi against the currencies of New Zealand's five main trading partners, was at 60.36 (60.70), 90-day bank bills were steady at 5.84 per cent, and the monetary conditions index was at plus 161 (plus 189).
The kiwi eased against its other main trading partners today and by close was buying 0.5104 euro (0.5154 at yesterday's close), 64.71 yen (65.20), 33.87 pence (34.18), and 0.7459 Swiss francs (0.7529).
The Australian dollar was at $NZ1.0765 ($NZ1.0724).
On the debt market, the April 2004s were flat at 5.59 per cent, as were the November 2006s at 5.74 per cent, the November 2011s at 6.02 per cent, and the April 2013s at 6.05 per cent.
- NZPA
<i>Currency:</i> Kiwi treads water after overnight fall
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