KEY POINTS:
The New Zealand dollar crashed through US69c today as Japanese investors offloaded the currency.
The low of US68.25c in the domestic session was more than one and half cents below the US69.80c level at 8am. It struggled back to US68.82c at 5pm.
Dealers said the currency was now in a new lower trading range and would continue to be under pressure from selling by Japanese investors who bought in attracted to the high interest rates in New Zealand.
The kiwi, which floated at US44.44c in March 1985, hit US81.53c in February. It dropped below the US70c level on Friday afternoon, then managed to hold above US70c for most of the time until early yesterday. It continues to trade at near one year lows.
"A lot of margin guys are offloading," said ANZ chief dealer Murray Hindley.
The selling intensified when the New Zealand dollar dropped below 75 on the yen cross.
He said a mixture of US names and Japanese names were selling.
The lower New Zealand dollar helps exporters who get more local currency when they repatriate overseas earnings but increases the cost of imports and makes overseas travel for New Zealanders more expensive.
Every one cent fall in the currency on the US cross adds 10c a kilogram of milksolids to dairy farmers' payouts as a general rule of thumb. The average Fonterra farmer produces more than 100,000kg of milksolids a year. So at one point today the average Fonterra farmer was in theory $15,000 better off.
The New Zealand dollar has been chasing short term swings in US dollar sentiment, Bank of New Zealand currency strategist Danica Hampton said.
The NZ dollar hit a seven-week high against the aussie around A79.90c about 7am today, from A79.47c at yesterday's local close. It was A79.62c at 5pm.
Against the yen, the kiwi dropped to 74.90 at 5pm from 76.77 yen at 5pm yesterday.
The NZ dollar was also buying 0.4613 euro from 0.4684, while the trade weighted index was 63.82 at 5pm from 64.57.
- NZPA