The New Zealand dollar continued to lose ground against its Australian counterpart today as the difference between the two countries' official cash rates (OCRs) recorded its widest gap in nearly 20 years.The kiwi was worth 77.54Ac at 5pm today, down from
The New Zealand dollar continued to lose ground against its Australian counterpart today as the difference between the two countries' official cash rates (OCRs) recorded its widest gap in nearly 20 years.
The kiwi was worth 77.54Ac at 5pm today, down from 77.80Ac at the same time yesterday.
It took a knock at 3.30pm when the Reserve Bank of Australia (RBA) announced it was raising its base lending rate 15 basis points to 4%, but managed to recover before continuing its previous slow slide.
With New Zealand's OCR at an emergency rate of 2.5%, the 1.5 percentage point gap between the two was now the widest it had been since 1991, said Derek Rankin of Rankin Treasury Advisory.
At a cross rate of about 77.50Ac, the New Zealand dollar was still looking to plumb lower, he said.
"Investment capital clearly is going to be looking for a home in Australia more than a home in New Zealand."
However, the exchange rate slide was not violent as the market had already factored in a rise in the RBA's OCR and market rates were quite different from the cash rates, he said.
"If you are looking at the longer term bond rates, our rates are actually higher than theirs."
Against the US dollar the kiwi was worth 69.68USc at 5pm, down from 69.86USc yesterday.
Mr Rankin said the kiwi was range trading between 68USc and 72USc.
The kiwi was struggling to go down as the Australian was underpinning it and finding it difficult to go up because of problems in the world and in the Eurozone, he said.
The kiwi was up to €0.5152 from €0.5130, up to ¥62.26 from ¥62.20 and up to 46.70p from 46.05p.
The trade weighted index was 64.69 at 5pm today, little changed from 64.66 yesterday.
In overseas markets, the UK pound dipped on Tuesday and was seen likely to stay weak after tumbling to a 10-month low the previous day, while the euro's outlook remained clouded by uncertainty over a bailout for debt-strapped Greece.
Sterling dipped 0.1% from late US trading on Monday to $US1.4976.
The euro held steady at $US1.3557, not too far from a nine-month low of $US1.3443 hit on trading platform EBS in February.
