Kiwi slumps on speculation America may end easing bias this year
It had earlier touched 81.37 cents, its lowest level since November 21.
The New Zealand dollar slumped to its lowest this year on expectations an improving US economy may prompt its central bank to end its quantitative easing policy this year.
The kiwi fell to 81.58 US cents from 82.48 cents at 5pm yesterday. It earlier touched 81.37 cents, its lowest level since November 21, when it traded at 81.08 cents. The trade-weighted index dropped to 77.05 from 77.60 yesterday.
The US currency has been buoyed by suggestions the Federal Reserve may end its policy of buying $US85 billion of Treasuries and mortgage-backed securities each month to boost growth.
John Williams, president of the Federal Reserve Bank of San Francisco, said in a speech yesterday the central bank could begin reducing the pace of securities purchases as early as the northern hemisphere summer, calling a halt to the programme some time late this year.
The kiwi dropped after the comments, says Imre Speizer, senior markets strategist at Westpac Bank. "Dialling back quantitative easing means a US dollar bounce and a kiwi fall."
He expects it may drop to as low as 78 US cents but says it may bounce today to 82.20 US cents as weaker US data suggests growth in the world's largest economy is still uncertain.
Weaker reports in the US yesterday showed factory activity slipped in the mid-Atlantic region, while ground breaking for new homes declined.
In New Zealand, the government confirmed in its Budget that it still expects to return to surplus in the 2015 financial year.
The kiwi dropped to 83.13 Australian cents, from 83.44 cents at 5pm yesterday. It fell to 83.37 yen from 84.30 yen, and slid to 63.30 euro cents from 64.07 cents and weakened to 53.39 British pence from 54.16 pence.
(BusinessDesk)
Tina Morrison
Fri, 17 May 2013
Fri, 17 May 2013
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Kiwi slumps on speculation America may end easing bias this year
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