The New Zealand dollar continued its downward drift today, hitting US60.25c, a level last seen in March.
It recovered to US60.65c during a quiet session, having closed at a level similar to yesterday.
The NZ currency lost ground against all the country's major trading currencies. It closed at A82.70c from A82.86c yesterday evening, 0.4815 euro from 0.4845, and 70.45 yen from 70.56. The TWI finished the local session on 61.43 from 61.54.
Tomorrow's trade data could put more downward pressure on the kiwi as well, if the forecast of a small surplus does not eventuate. The annual trade deficit is expected to swell to $6.8 billion.
The kiwi has been heading south since worse than expected current account figures on Thursday.
ANZ Investment Bank said the NZ dollar was under pressure during the past 24 trading hours as support levels were tentatively tested.
The support zone of US60.20c to US60.50c remained all important as the last line of defence ahead of US59.70c, ANZ said.
The kiwi has suffered from US dollar strength ahead of an expected US interest rate rise late this week, but overnight it was the euro's turn to shine.
It hit a record high against the yen and inched further away from a two-month low versus the dollar after hawkish comments by European central bankers stoked expectations for higher interest rates.
ECB Governing Council member Yves Mersch told Bloomberg news the European Central Bank had never ruled out tightening policy faster than by a quarter-point every three months.
Nor did he rule out a rate rise after an ECB meeting on August 3, to be held by teleconference, or a 50-basis-point rate increase.
"The effects of his comments will linger for a while," said a dealer at a Japanese trust bank.
"The difference in interest rates is driving the market right now, leaving the yen at a disadvantage."
In contrast, the dollar failed to capitalise on expectations that the Federal Reserve will raise rates by 25 basis points to 5.25 per cent after its two-day policy meeting ends on Thursday.
The dollar fell against the yen after Wu Xiaoling, deputy governor of China's central bank, was cited by the official Financial News as saying that countries around the world should gradually rely less on the dollar for trade and their foreign exchange reserves.
The Australian dollar firmed to US73.38c at the local close from US73.17c.
The following are Reuters currency rates:
5pm today 5pm Monday
NZ dlr/US dlr US60.65c US60.63c
NZ dlr/Aust dlr A82.70c A82.86c
NZ dlr/euro 0.4815 0.4845
NZ dlr/yen 70.45 70.56
NZ dlr/stg 0.3328 0.3332
NZ TWI 61.43 61.54
Australian dollar US73.38c US73.17c
Euro/US dollar US1.2418 US1.2516
US dollar/yen 116.16 116.38
- NZPA
<i>Currency:</i> NZ dollar continues slide
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