NZ dollar drops to three-month low as investors remain wary
Optimism returns to markets but investors still wary.
The New Zealand dollar fell to its lowest level in more than three months even as some optimism returned to financial markets.
The kiwi touched 64.18USc and was trading at 64.74USc at 8am in Wellington, from 64.84USc at 5pm yesterday. The trade-weighted index hit a seven-week low of 71.01, and was at 71.51 at 8am from 71.64 yesterday.
Equity markets rose in the US following stockmarket gains in China, with the Shanghai Shenzhen CSI 300 Index rising 2.1%. The recovery in the price of oil also offered investors some confidence.
Still, the slump in oil prices remains a concern and investors are wary about holding commodity-linked currencies such as the kiwi, given New Zealand interest rates are expected to continue dropping this year.
"Yesterday we had a massive selloff in commodities, with new multi-year lows in oil so things really spiralled down," says Westpac Banking Corp senior market strategist Imre Speizer.
"Markets, although they rebounded last night, were selective about what currencies they decided to buy in this rebound,” he says.
The kiwi dollar was out of favour, given expectations the Reserve Bank may cut the benchmark interest rate twice this year, Mr Speizer says. He expects the kiwi to fall to 62USc by March.
In New Zealand today, food price data for December is released at 10.45am, the last key release ahead of fourth-quarter inflation data published next week.
The New Zealand dollar fell to 92.66Ac from 93.43Ac yesterday, slipped to 44.89 British pence from 45.02 pence, and slid to 4.2658 yuan from 4.2726 yuan. It advanced to 76.50 yen from 76.16 yen and was little changed 59.61 euro c from 59.57euro c.
(BusinessDesk)
Tina Morrison
Fri, 15 Jan 2016
Fri, 15 Jan 2016
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NZ dollar drops to three-month low as investors remain wary
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