The NZ dollar continued to fall against the greenback, trading below US69 cents off the back of the biggest drop in dairy prices in three months.
The GlobalDairyTrade price index fell 3.9 per cent yesterday, while whole milk powder fell 7.7 per cent to US$3294 a tonne, mainly due to a lack of buyers to mop up the extra supply on offer.
The kiwi traded as low as US68.90c Tuesday, before paring back to US69.02c at 5pm, compared to US69.21c at 8am. The trade-weighted index fell to 77.13 from 77.39 on Tuesday and 77.52 before the New Year holiday.
Mark Johnson, senior dealer, foreign exchange, at OMF Wellington, said apart from the dairy auction, there was little local data due in the next couple of weeks so the market was being driven by offshore.
"The GlobalDairyTrade auction was weaker again, the second consecutive fall and looking at the fundamentals of the economy, the auction weighs on the kiwi, while the US dollar index hit a 14-year high [Tuesday] night, and as a consequence, the kiwi is coming under pressure."
