NZ dollar unmoved by weakened business sentiment

The New Zealand dollar remained below 77USc against the greenback, unable to regain that level after reaching it for the first time in nearly eight weeks yesterday.

The kiwi was little changed during a quiet session, buying 76.77USc by 5pm, up from 76.79USc at 8am and having ranged between 77.04USc and 76.54USc overnight.

The currency was virtually unmoved by the release of a key quarterly business survey showing a dent in business sentiment after Christchurch's devastating earthquake in February.

However, the decline in the New Zealand Institute of Economic Research's quarterly survey was not as bad as some analysts had feared.

A net 5% of firms experienced a decline in trading activity in the March quarter, on a seasonally adjusted basis, compared to a net 1% in the December quarter. A net 11% of firms were pessimistic in the three months to March, compared to a net 1% in the December survey.

The kiwi inched down on the data release before recovering and hitting a session high of 76.94USc by mid-afternoon.

The currency rose against the Australian dollar, to 74.35Ac by 5pm from 74.04Ac late yesterday.

Australia's central bank left its cash rate at 4.75% this afternoon, compared with the Reserve Bank of New Zealand's 2.5%.

The Reserve Bank of Australia's decision was not a surprise, given the lack of inflation pressure despite an economic boom.

The NZ dollar was steady at ¥64.74, down from a 4-1/2-month high near ¥64.90 around 5.30pm yesterday.

The kiwi was also flat against other key currencies, at €0.5405 and 47.61p. Consequently, the trade weighted index was also unmoved, at 67.34.

The euro remained near a five-month high against the US dollar and an 11-month high against the yen as investors weighed up the likelihood of further gains for the single currency, with expectations of interest rate rises already priced in.

The European Central Bank was tipped to raise rates by 25 basis points later this week from a record low to fight rising inflationary pressures in the euro zone. Two more 25-basis-point rate hikes were factored in by year-end.