NZ dollar heads for 1.9% weekly fall as Republicans call off vote on fiscal cliff
The New Zealand dollar fell yesterday, and is headed for a 1.9 percent weekly decline, after US Republicans called off a vote on a plan to avert the fiscal cliff of US$600 billion tax increases and spending cuts, raising the risk of recession next year.
The kiwi fell to 83.02 US cents at 5pm in Wellington from 83.32 cents at 8.30am and 83.47 cents the day before. The trade-weighted index fell to 74.11 from 74.46 yesterday, and is heading for a 1.7 percent weekly decline.
US Republican leaders called off a vote in Congress on a measure put up by Speaker John Boehner to break the deadlock on negotiations with the White House, pushing out any deal until after Christmas. As US legislators drag their heels on cutting a deal, markets grow more pessimistic after similar delays over lifting the nation's debt ceiling led to a credit rating downgrade last year.
"They're all coming back after Christmas and the longer they go, the worse it gets," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional at Auckland. "It's going to be a little risk off for the next couple of days" which will weigh on the kiwi dollar, he said.
New Zealand's currency took a hit yesterday after government figures showed the economy grew at a 0.2 percent quarterly pace in the September quarter, half what economists were picking.
The kiwi dollar has been one of the top performing currencies this year, having gained 6.7 percent this year, and Kelleher said traders will be using the looming year-end to cash out on those gains.
The New Zealand dollar fell to 51.08 British pence from 51.32 pence and dropped to 62.64 euro cents from 63.09 cent. It sank to 69.65 yen from 70.16 yen yesterday and fell to 79.46 Australian cents from 79.68 cents.