Dollar drops to six-month low vs. Aust as growth accelerates across the Tasman
The New Zealand dollar fell to a six-month low against its trans-Tasman counterpart after figures showed an improving Australian economy, on growing exports and accelerating home building. The kiwi tumbled against Papua New Guinea's kina.
The kiwi fell as low as 90.70 Australian cents, trading at 90.73 cents at 5pm from 91.25 cents yesterday. It fell to 84.12 US cents from 84.27 cents at 8am and 84.59 cents yesterday.
Australia's economy grew 1.1 percent in the first three months of the year, beating the 0.9 percent growth forecast in a Bloomberg survey. Growth across the Tasman was underpinned,by iron ore exports, and low interest rates fuelling increased house building. The Reserve Bank of Australia yesterday kept the key rate unchanged at 2.5 percent, while saying signs of growth weren't enough to stoke inflation.
"The market's long on kiwi crosses, and it's a continuation of the unwinding," said Tim Kelleher, head of institutional FX sales New Zealand at ASB Institutional in Auckland, referring to the position where an investor bets an asset will appreciate. "I wouldn't get too carried away, the kiwi's at the bottom end of the range."
Papua New Guinea's kina soared 18 percent after reports the central bank introduced new trading restrictions following a steady decline in the Pacific island's currency. The kiwi sank to 2.0007 kina at 5pm in Wellington from 2.3237 at midday.
New Zealand's currency dropped to a three-month low after dairy prices tumbled at Fonterra Cooperative Group's latest auction. Weak dairy prices also drove local commodity prices down last month, according to a bank survey.
Government figures today showed New Zealand house building activity was near a 12-year high in the first three months of the year, as growing construction intentions were converted into actual work. A housing shortage in Auckland and the rebuild of Christchurch are seen as the major drivers for New Zealand's economic growth this year.
The local currency fell to 61.79 euro cents from 62.17 cents yesterday ahead of tomorrow’s European Central Bank meeting where monetary policy is expected to be loosened.
The kiwi dropped to 50.30 British pence from 50.50 pence yesterday and declined to 86.37 yen from 86.55 yen.