The New Zealand dollar consolidated after falling more than half a US cent today on news that the economy expanded less than forecast in the second quarter.The lower than expected growth figure implies interest rates will remain lower for longer, which is
The New Zealand dollar consolidated after falling more than half a US cent today on news that the economy expanded less than forecast in the second quarter.
The lower than expected growth figure implies interest rates will remain lower for longer, which is a negative factor for the currency.
New Zealand's gross domestic product rose 0.2% in the second quarter, less than the 0.8% the market was expecting and the 0.9% the Reserve Bank of New Zealand had forecast.
The NZ dollar was 73.23USc at 5pm, after falling to 73.15USc from 73.70USc just before the data was released. It was 73.59USc at 5pm yesterday.
BNZ economists said the New Zealand economy was going nowhere fast and the weakness in growth was across the board and not due to any one-off factors.
BNZ has cut its forecast for the third quarter to a rise of 0.6% from a rise of 1% previously, citing the September 4 earthquake in Christchurch and poor climatic conditions.
"The second quarter figure was a significant margin below market expectations. Importantly it is below what the Reserve Bank factored in," said Mike Jones, a currency strategist at BNZ.
"It very much supports our view that the Reserve Bank will keep interest rates on hold until at least the end of this year."
The NZ dollar fell against a range of currencies. It was at 76.59Ac at 5pm from 76.94Ac at the same time yesterday.
It slipped to €0.5466 at 5pm from €0.5537 at the same time yesterday and to ¥61.94 from ¥62.45 yesterday.
The trade weighted index was down to 66.58 from 67.08 yesterday.
