Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ dollar falls on concern about lower dairy prices

NZ dollar falls on concern lower dairy commodity prices may weigh on economy

By Tina Morrison

April 3 (BusinessDesk) – The New Zealand dollar was the worst-performing major currency overnight on speculation lower dairy commodity prices will weigh on economic growth.

The kiwi was the worst performing currency tracked by Reuters overnight, falling as low 85.45 US cents after rising as high as 87 cents earlier this week. The local currency was at 85.58 cents at 8am in Wellington from 86.02 cents at 5pm yesterday. The trade-weighted index fell to 80 from 80.37 yesterday.

Investors reduced their New Zealand dollar holdings after dairy product prices had the biggest drop in almost 20 months at yesterday’s Fonterra Cooperative Group GlobalDairyTrade auction, with whole milk powder falling to its lowest level in more than a year. That marked the fourth straight decline in auction prices and raised concerns about the outlook for New Zealand’s 40-year high terms of trade, which are seen as a factor underpinning accelerating economic growth this year.

“Globally the market is focusing on dairy trade,” said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand. “It is a clear signal to not only New Zealanders but also the globe that a 40-year high peak in terms of trade can’t be considered a one-way bet.

“It was a catalyst for a correction back to where we have been recently, rather than a complete game changer,” Tuck said. “The kiwi had got too high, within a cent and a half of its post-float high.”

ANZ expects the New Zealand dollar to decline to 83 US cents by the end of the second quarter as the US economy improves. Traders will be looking to tonight’s ISM non-manufacturing survey and tomorrow’s payroll report to gauge how the world’s largest economy is tracking, Tuck said.

“Our central expectation is for continued pressure on the New Zealand dollar from here,” Tuck said.

The kiwi will likely trade between 85 US cents and 86.10 cents today, ANZ said.

The New Zealand dollar dropped to 92.55 Australian cents from 93.06 cents yesterday. Today, Reserve Bank of Australia governor Glenn Stevens is scheduled to speak at a business lunch to the American Chamber of Commerce in Australia and Australia also has data on retail sales and international trade.

The local currency slipped to 62.18 euro cents from 62.31 cents yesterday ahead of the European Central Bank meeting today.

The kiwi fell to 51.48 British pence from 51.73 pence yesterday and weakened to 88.81 yen from 89.30 yen.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Reserve Bank: Official Cash Rate Unchanged At 1.75 Percent

Global economic growth has increased and become more broad-based. However, major challenges remain with on-going surplus capacity and extensive political uncertainty... More>>

Kaikōura Earthquake: Private Insurers Receive $1.8b Claims

Insurance Council Chief Executive Tim Grafton said most is for commercial loss at $1.36 billion, with residential claims amounting to over $460 million. “...We have a high level of confidence that most people will have received settlement offers by the end of this year." More>>

ALSO:

Forms And Data: New Proposals To Simplify Personal Income Tax

The Government is proposing to make tax simpler for individuals, with people whose only income is from a salary, wages or investments no longer being required to file tax returns to receive tax refunds or to calculate any additional tax. More>>