WELLINGTON - The New Zealand dollar plummeted amid concern over comments by the governor of the Reserve Bank, Dr Don Brash, and after trade figures showing imports are still outstripping exports.
The currency plunged more than three-quarters of a cent to an eight-month low after wire agency reports from Dr Brash's appearance at Parliament's finance and expenditure select committee began circulating.
That was around the same time as Statistics New Zealand released the July trade figures.
"Trade data, Brash, all culminated in a sell-off," one foreign exchange dealer said.
A senior dealer said he believed Dr Brash's comments had been misinterpreted by US and Asian traders, who sold heavily.
"We believe traders in Asia have misconstrued some of Brash's comments from earlier in the day when he was talking about the Reserve Bank's monetary policy stance and its relationship with the current account deficit."
Statistics New Zealand said the July trade balance, based on provisional import figures and estimated export figures, was $147 million in deficit.
The currency dropped to a low of 51.70USc and closed locally at 51.85c but continued to fall in offshore trade where it went as low as 51.60c before climbing back to 51.86c at 10.30 pm.- NZPA
Kiwi drops after Brash comments
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