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NZ dollar slumps against Australian currency

The New Zealand dollar fell to a five-month low against its Australian counterpart after hawkish comments from the Reserve Bank of Australia.The Australian dollar rose more than 1 percent against the greenback and touched as high as US94.94c, its stronges

NZPA
Tue, 21 Sep 2010

The New Zealand dollar fell to a five-month low against its Australian counterpart after hawkish comments from the Reserve Bank of Australia.

The Australian dollar rose more than 1 percent against the greenback and touched as high as US94.94c, its strongest since mid-2008, after Reserve Bank of Australia Governor Glenn Stevens suggested Australian interest rates would rise further.

The NZ dollar fell to a low US76.80c early today, before dragging itself back to A77.04c at 8am, only slightly down on its level at 5pm yesterday.

BNZ markets strategist Mike Jones said Mr Stevens essentially put markets on notice, suggesting that if "downside possibilities do not materialise" Australian interest rates would have to rise.

Mr Stevens' hawkish undertones provided a clear contrast to last week's monetary about-face from the Reserve Bank of New Zealand, Mr Jones said.

Following last week's publication of the RBNZ's watered down tightening expectations, local markets now did not expect another rate hike in this country until March.

The kiwi did manage to edge up against the US dollar, buying US72.96c at 8am from US72.77c at 5pm.

The US dollar slipped broadly, with investors positioning for the possibility the US Federal Reserve may suggest the need to inject more stimulus into the economy.

The US central bank meets tomorrow morning (NZT) and the chance of more Fed quantitative easing -- which may push benchmark yields lower, hurting the return of US dollar-assets -- highlighted differences in policy among major central banks.

The NZ dollar lifted to 0.5583 euro at 8am from 0.5566 at 5pm, and was up to 62.53 yen from 62.35. The trade weighted index was up to 67.04 at 8am from 66.89 at 5pm.

NZPA
Tue, 21 Sep 2010
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NZ dollar slumps against Australian currency
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