Kiwi gains slide as equities in Asia weaken
BUSINESSDESK: The New Zealand dollar pared gains as weaker equity markets across Asia took the sheen off stronger than expected local second quarter economic growth.
The kiwi fell to 82.48 US cents at 5pm in Wellington from 82.76 cents at 8am and 82.82 cents yesterday. The trade-weighted index declined to 73.21 from 73.53 yesterday.
Stocks across Asia fell after Chinese manufacturing figures confirmed the world's second-biggest economy is slowing industrial production.
China's Shanghai Composite fell 1.1% in afternoon trading, while Japan's Nikkei 225 index slid 1.6% and Hong Kong's Hang Seng index was down 0.5%.
That overwhelmed the impact of New Zealand government figures which showed gross domestic product grew 0.6% in the three months ended June 30, twice what economists were expecting.
"The market is second-guessing the overall growth outlook for the global economy," says Dan Bell, currency strategist at HiFX in Auckland. "There's more downside risk for the kiwi, at least against the US."
Incoming Reserve Bank governor Graeme Wheeler and Finance Minister Bill English announced their new policy target agreement, which kept the target inflation band at between 1% and 3%, but introduced a focus for the regulator to keep the long-run average at the 2% mid-point.
European and US manufacturing figures and a Spanish government bond auction will be the main features in Northern Hemisphere trading for investors, as global industrial production wanes and as Europe's sovereign debt woes continue to erode traders' confidence.
The kiwi fell to 64.48 yen from a five-month high of 65.65 yen yesterday and was little changed at 79.20 Australian cents from 79.22 cents. It slipped to 63.11 euro cents from 63.41 cents yesterday and was little changed at 50.90 pence from 51 pence.