The New Zealand dollar was sold down yesterday but found some stability near the end of the session.
At 5pm the kiwi was US41.79c, not far from Monday's close of US41.77c, while the aussie hovered at US51.82c, a touch off Monday's US51.85c close.
"It's been as low as US41.62c, we saw quite good bids around that area so it's bounced up," one local dealer said.
"Aussie's been up to US51.82c and down to about US51.72c, it's basically sitting around the highs at the moment.
"Both (currencies) are looking short at the moment, so probably a little bit more buying left in it. But heading into tonight... we'll probably see quite solid offers around US41.90c in the kiwi, and around the same in the aussie, US51.90c," the dealer said.
Both kiwi and aussie were stuck below the next figure, unable to break through US42c and US52c respectively.
"It's been an offered market and it's really gone down and popped back up again, so we've mainly seen selling throughout the day," she said.
The Government released its economic update and budget policy statement yesterday, pointing to a cut in the surplus as the country's growth rate slows.
The terrorist attacks on the United States and the general world economic slowdown has Treasury scaling back its economic growth predictions from 3.3 per cent to 1.9 per cent in the year ending March 2003.
The Government's borrowing programme is also set to increase. Dr Cullen is going to borrow $600 million more this year than he planned in the budget, with $4.1 billion borrowed this year.
The market has already factored in a downgrade of growth forecasts and an extra $300 million bond tender.
Treasury picked the growth rate to be 3.7 per cent in the year to March 2004. Though its predictions came with numerous caveats, things could get much worse for New Zealand if the United States didn't bounce back economically next year.
On the other hand if prices farmers were getting for exports held up, economic growth could be much stronger.
Finance Minister Michael Cullen said of the $10 billion the Government would borrow over the next five years, $4.1 billion was to buy assets such as Air New Zealand and construct new hospitals, schools and prisons.
The euro spurted to a six-week peak against the dollar after Germany's top survey of business confidence rose for the first month in four, raising hopes the euro zone's largest economy is stabilising, but a US stock market rally whittled away the single currency's gains.
On the crosses the kiwi was buying A80.64c (A80.58 at yesterday's close) 53.56 yen (53.39), 28.61 pence (28.73), 0.9045 marks (0.9045), 0.6815 Swiss francs (0.6802) and 46.25 euros (46.25).
The Australian dollar was buying $NZ1.2401 ($NZ1.2410).
The trade-weighted index was at 49.99 (49.96), the 90-day bank bills were at 4.87 per cent (4.87) and the monetary conditions index eased to minus 878 (minus 881).
On the debt market, the March 2002 bonds were at 4.75 per cent (4.76 per cent), the April 2004s were at 5.48 per cent (5.62), the November 2006s were at 6.26 per cent (6.28) and the November 2011s were at 6.72 per cent (6.74).
- NZPA
<i>Currency:</i> Santa Claus nowhere in sight for NZ dollar
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