Article – BusinessDesk
by Paul McBeth March 4 (BusinessDesk) – The New Zealand dollar touched a 19-year low against the Australian dollar ahead of next week’s expected interest rate cuts and an International Monetary Fund warning of lower economic growth in New Zealand.
Kiwi dollar falls to 19-year low against Aussie
by Paul McBeth
March 4 (BusinessDesk) – The New Zealand dollar touched a 19-year low against the Australian dollar ahead of next week’s expected interest rate cuts and an International Monetary Fund warning of lower economic growth in New Zealand.
The kiwi fell as low as 72.88 Australian cents, the lowest since September 1992, coinciding with the European Central Bank president Jean-Claude Trichet said Europe’s price stability requires “strong vigilance,” language used to signal a rate hike before the global financial crisis in 2008.
That comes amid expectations the Reserve Bank of New Zealand will cut the official cash rate 50 basis points at next week’s meeting in response to the 6.3 magnitude earthquake in Christchurch which has devastated the region and caused billions of dollars of damage.
That would put New Zealand’s monetary policy at odds with other nations, and damp the country’s favourable interest rates.
“We’re getting to a situation we weren’t imagining six weeks ago, where we’ve cut our rates, and other central banks might be hiking,” said Chris Tennent-Brown, economist at ASB Institutional. “That might put pressure on the (kiwi’s) cross-rates over the next three to six months.”
The kiwi fell to 72.93 Australian cents from 73.23 cents yesterday, and dropped to 74.05 U.S. cents from 74.54 cents.
It declined to 65.30 on the trade-weighted index of major trading partners’ currencies from 65.71 yesterday, and was little changed at 60.96 yen from 61.03 yen. It sank to 53.07 euro cents from 53.74 cents yesterday, and slipped to 45.51 pence from 45.67 pence.
Tennent-Brown said the currency may trade between 74 U.S. cents and 74.50 cents today, with American employment data the major event. The world’s biggest economy probably added 190,000 jobs last month, according to a Bloomberg survey, though Tennent-Brown said employment and housing statistics show the U.S. recovery is still tepid.
The International Monetary Fund will conduct a mission to New Zealand at the end of the week, and spokeswoman Caroline Atkinson told reporters it will probably downgrade its growth forecast from an annual 3% due to last week’s earthquake, Reuters reported.
Oil markets settled down, with the price of Brent crude little changed at US$114.76 a barrel after Venezuelan President Hugo Chavez offered to act as a negotiator with Libya.
The Middle Eastern nation has been on the brink of civil war as the region’s high unemployment, scarce food and repressive politics have stoked political unrest and already toppled administrations in Tunisia and Egypt.