INDEPENDENT NEWS

NZ dollar falls after RBA comment, Chinese data

Published: Fri 10 Aug 2012 05:22 PM
NZ dollar falls as RBA complains about strong currency, Chinese trade figures disappoint
By Paul McBeth
Aug. 10 (BusinessDesk) - The New Zealand dollar extended its decline in local trading after the Reserve Bank of Australia warned the strength of its currency is threatening the Australian economy, while Chinese trade figures came in short of expectations.
The kiwi is poised for a 1.2 percent weekly decline as it fell to 80.91 US cents at 5pm in Wellington from 81.19 cents at 8am and 81.49 cents yesterday. The trade-weighted index fell to 72.89 from 73.02 yesterday, and faces a 0.8 weekly decline.
The RBA warned Australia faces risks around the strength of its dollar, which traded at US$1.0522 at 5pm in Wellington, and that the "persistently high level of the exchange rate may be more contractionary for the economy than historical relationships suggest," according to the minutes of this week's meeting. That dented investors' appetite for the trans-Tasman pair, which have been under pressure this week as policy makers on both sides of the Ditch try to talk them down.
"Both currencies will go lower tonight as they look overextended and have had unabated rises," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. "There's still another day or two of weakness (in the kiwi)."
Demand for the trans-Tasman currencies was also dented by weaker-than-expected Chinese trade figures, which showed the world's second biggest economy reported a 1 percent increase in outbound shipments last month from a year earlier and a 4.7 percent rise in imports. Analysts were picking export growth of 8 percent and an increase in imports of 7 percent.
New Zealand figures today showed a fall in spending on electronic cards last month, adding to the downbeat tone from yesterday's worse than expected unemployment rate, which prompted economists to push out their expectations for central bank rate hikes.
Traders are now pricing in 6 basis points of cuts to the 2.5 percent official cash rate in the coming 12 months, according to the Overnight Index Swap curve, compared to a 1 point increase priced in yesterday.
Kelleher said the currency may trade between 80.60 US cents and 81.15 cents in the Northern Hemisphere session.
The New Zealand dollar was little changed at 76.83 Australian cents from 76.76 cents yesterday, and fell to 63.60 yen from 63.87 yen. It fell to 51.79 British pence from 51.91 pence, and increased to 65.83 euro cents from 65.71 cents.
(BusinessDesk)
BusinessDesk
Independent, Trustworthy New Zealand Business News
The Wellington-based BusinessDesk team provides a daily news feed for a serious business audience.
Contact BusinessDesk
Email:

Next in Business, Science, and Tech

Understanding DDoS cyber attacks – Expert Reaction
By: Science Media Centre
FMA sees spike in investment scam complaints since COVID
By: Financial Markets Authority
Strong export growth narrows current account deficit to $3B
By: Statistics New Zealand
GDP rises in the June 2021 quarter
By: Statistics New Zealand
$350 Million Plant To Deliver Renewable Energy-from-waste Considered
By: South Island Resource Recovery Limited
Olam confirms plans for commissioning of NZ dairy plant
By: Olam International
View as: DESKTOP | MOBILE © Scoop Media