Dollar hits two-month low against greenback

The New Zealand dollar fell to a two-month low as investors see a likely win by Democrat candidate Hillary Clinton in the US presidential campaign as paving the way for higher interest rates.

The kiwi fell as low as 71.07USc, trading at 71.26USc at 8am from 71.53USc yesterday.

The trade-weighted index edged down to 76.29 from 76.47.

The Dollar Index, a measure of the greenback against a basket of currencies, rose 0.3% after yesterday's presidential debate.

While Republican nominee Donald Trump delivered a stronger performance, the taint to his brand from reports of his attitudes to women has seen his support dwindle in public polls and from within his own party.

If Mrs Clinton were to secure victory on November 8, that's seen as supportive to the economy and would likely free up the Federal Reserve to raise the federal funds rate in December.

"While Mr Trump's performance was seen to be improved from the first debate, the general view is that the damage to his brand from fresh media reports over the weekend is now irreparable," Bank of New Zealand currency strategist Jason Wong says.

"A Clinton victory would ease the way for the Fed to hike again in December, avoiding a possible risk-off move under the alternative scenario."

The kiwi fell to 93.72Ac from 94.18Ac yesterday after Russian president Vladimir Putin said his country would join the Organisation of the Petroleum Exporting Countries in freezing prices or cutting production.

That bolstered commodity-sensitive currencies, benefiting the Australian dollar more than the kiwi due to Australia's exposure to hard commodities.

The local currency dropped to 4.7799 Chinese yuan from 4.7925 yuan yesterday, extending its decline from when the People's Bank of China set the lowest trading midpoint for its currency in five years.

The kiwi rose to 73.88 yen from 73.57 yen yesterday and was little changed at 57.70 British pence from 57.69 pence. It traded at 63.99€c from 63.92€c yesterday.

(BusinessDesk)

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