The New Zealand dollar today rode out comments from Finance Minister Michael Cullen that were apparently aimed at driving the currency lower.
"It's as solid as ever," said an Auckland dealer. "We've heard it all before. He's been talking down the currency for the last year and we're still here."
Dr Cullen was quoted in an interview with Bloomberg in London saying the general consensus was the Reserve Bank would not raise its official cash rate again this cycle, but may be on hold until 2008.
In its monetary police statement a fortnight ago, the Reserve Bank said it was now less confident that no further policy tightening would be required in this cycle.
"I guess it's more the fact that he was worked up enough to say it," ANZ National Bank economist Sean Comber said.
From around US66.50c about 7am today, the kiwi fell one US cent in quick time. However, it had partly recovered by the close to US65.87c compared with US66.90c at 5pm yesterday. Similarly against the Australian dollar the kiwi fell from A88.30c to below A87.45c before pulling back to A87.87c by the close.
Against the euro, the kiwi closed at 0.5190 from 0.5250 at 5pm yesterday, while against the yen it was at 77.14 from 78.00. The trade weighted index ended on 66.18 from 67.04.
A positive consumer confidence survey out today was another reason not to sell the kiwi, ANZ said.
In major currency trading, the US dollar inched down, trimming gains made on strong US consumer confidence data that helped to soften expectations the Federal Reserve may cut interest rates.
Japanese exporters were seen selling the dollar against the yen in Tokyo, but traders said the US currency would be supported after the market realised that it may have moved ahead of itself in girding for a possible rate cut in coming months.
"Since last week, the market has begun to factor in a rate cut by the Fed by year end, so now we're seeing an adjustment of that," said a trader at a Japanese bank.
"Data later this week and next week should give us a better idea of how rates will move in the near- to mid-term."
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US65.87c US66.90c
NZ dlr/Aust dlr A87.87c A88.58c
NZ dlr/euro 0.5190 0.5250
NZ dlr/yen 77.14 78.00
NZ dlr/stg 34.76p 35.21p
NZ TWI 66.18 67.04
Australian dollar US75.07c US75.48c
Euro/US dollar 1.2696 1.2750
US dollar/yen 117.11 116.52
- NZPA
<i>Currency:</i> NZ dollar rides out Cullen comments with minimal damage
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