The New Zealand dollar sank to a more than a 10-year low against the Australian dollar today on the view that interest rates are likely to fall in the wake of last week's devastating earthquake in Christchurch.
Since last Tuesday's quake, the kiwi has lost ground against most key trading partners' currencies, although it is fairly steady against the weak US dollar.
By 5pm, the kiwi was at 73.99Ac -- up from the day's low of 73.56Ac, its lowest point since late 2000 and up from late yesterday's 73.92Ac.
"The assumption is that rates in New Zealand will be on hold for a very long time, if not the change of a cut, whereas the Australian economy continues to outperform and maybe a chance of rate hikes in Australia," said ANZ Institutional Bank foreign exchange manager Murray Hindley. "I guess people are switching into Australia out of New Zealand."
The Reserve Bank of Australia kept rates at 4.75% today in a move expected by the market, which is pricing in a rise later this year.
In New Zealand, retail banks have begun lowering their home lending and deposit rates in response to falling wholesale interest rates, and the likelihood of a cut to the Reserve Bank's Official Cash Rate.
Against the US dollar, the kiwi was holding above 75USc but encountering sellers around 75.50USc. By 5pm, the kiwi was buying 75.22USc from 75.07USc late yesterday afternoon.
The currency was weaker at €0.5446 from €0.5462 euro and at 46.23p from 46.66p, but up at ¥61.75 from ¥61.31.
The trade weighted index was unchanged at 66.45.
The US dollar remains soft after hitting a 3-1/2-month low against major currencies on speculation the US Federal Reserve will lag other central banks's interest rate hikes to ward off inflation pressures.
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