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NZ dollar falls on Chinese milk duty, weak manufacturing


The New Zealand dollar fell after reports that Beijing will lift the duty on imported New Zealand milk and after figures showed Chinese manufacturing may be shrinking. The kiwi was already weaker as fourth-quarter economic growth missed estimates.

Paul McBeth
Thu, 22 Mar 2012

BUSINESSDESK: The New Zealand dollar fell after reports that Beijing will lift the duty on imported New Zealand milk and after figures showed Chinese manufacturing may be shrinking. The kiwi was already weaker as fourth-quarter economic growth missed estimates.

The kiwi fell as low as 80.66 US cents and traded at 80.81 cents at 5pm from 81.45 cents at 8am and 81.89 cents yesterday. The trade-weighted index sank to 72.18 from 73.

The kiwi dollar extended its slide after currency traders saw newswire headlines that local milk imports into China face higher tariffs. The duty is set to rise to 10 percent from 5.8 percent once a national quota of 100,000 tonnes is reached.

That added to the kiwi’s woes after HSBC’s flash PMI for China showed manufacturing in the world’s second-biggest economy may be in for a fifth monthly contraction. The trans-Tasman currencies dropped sharply after the PMI, which came just two days after BHP Billiton, the world’s biggest miner, warned of flatter Chinese demand for iron ore.

“There are headlines that China has raised duty on New Zealand milk imports, which is negative for the kiwi,” said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. “The PMI started the ball rolling, but the kiwi went down another 30 pips.”

Kelleher said the kiwi is “edging towards” a turnaround with a weaker outlook for China weighing on the economic fortunes for Australia and New Zealand, The level of 80.50 US cents will be a key test, he said.

The kiwi fell earlier in the day after government figures showed gross domestic product grew 0.3 percent in the three months ended Dec. 31, half the 0.6 percent pace predicted by the Reserve Bank and market economists.

New Zealand’s currency fell to 77.76 Australian cents from 77.99 cents yesterday, and dropped to 67.22 yen from 68.53 yen. It fell to 61.07 euro cents from 61.70 cents yesterday, and declined to 50.92 pence from 51.85 pence.

Paul McBeth
Thu, 22 Mar 2012
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NZ dollar falls on Chinese milk duty, weak manufacturing
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