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


NZ dollar falls to 3-week low, may extend decline

NZ dollar falls to 3-week low, may extend decline on Fed tapering, LVR restrictions

By Tina Morrison

Aug. 23 (BusinessDesk) – The New Zealand dollar will likely extend its 3.3 percent decline this week as the Federal Reserve moves closer to tapering its bond buying programme and as pending limits on low equity mortgage lending in New Zealand dampen expectations for interest rate hikes.

The kiwi fell to a three week low of 78.02 US cents, and was at 78.29 cents at 8am in Wellington, from 78.38 cents at 5pm yesterday. The trade-weighted index weakened to 73.98 from 74.05.

Demand for New Zealand’s currency is waning amid expectations the Fed will start reducing its US$85 billion a month bond buying programme from next month as the US economy improves. The looming end to the money printing programme is putting upward pressure on US interest rates and underpinning demand for the greenback. Meanwhile in New Zealand, the Reserve Bank is introducing LVR limits in a bid to dampen a house price bubble, reducing the need for an early rate hike.

“The kiwi will probably move lower which keeps the fall since about three days ago going,” said Imre Speizer, senior currency strategist at Westpac Banking Corp. “We are getting closer to Fed tapering which is causing US dollar strength and the second thing driving it is the LVR restrictions which were announced this week.”

Any bounce in the kiwi is likely to be capped at 79.50 US cents while there is support for the currency at 78 cents, Speizer said.

Traders tonight will be eyeing a report on US home sales after a report overnight showed US house prices rose an annual 7.2 percent in the second quarter. A separate report overnight showed US initial jobless claims rose for the week but the average for the four weeks was the lowest since November 2007, Speizer said.

The Jackson Hole summit of central bankers this weekend has no major Fed speeches scheduled and could be a non-event for markets, Speizer said.

The New Zealand dollar fell to 86.89 Australian cents at 8am in Wellington from 87.14 at 5pm yesterday and slid to 77.26 yen from 77.02 yen. The kiwi edged down to 58.64 euro cents from 58.77 cents yesterday and was little changed at 50.25 British pence.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Grey Power: Is Disappointed To Learn Of More Bank Closures

Many older people are being left without essential services because of cost cutting and the march of modern technology. It is now expected that most banking transactions can occur via the internet or telephone. Jan Pentecost, President of the Grey Power ... More>>


Economy: Supply Chain On Brink Of Overload Says National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken. “Worldwide supply chains are in disarray,” says Mr Aitken. ... More>>

Retail: Supermarkets Announced As Government’s Second Market Study

The Government has today launched a market study to ensure New Zealanders are paying a fair price for groceries. More>>


Statistics New Zealand: Retail Sales Recover In The September 2020 Quarter

Retail sales values recorded the largest September quarter rise since the series began in 1995, Stats NZ said today. Spending on major household items, vehicles, and groceries contributed to the strong 7.4 percent ($1.8 billion) rise in total ... More>>

Kea Aerospace: New Zealand Flies Into The Stratosphere

Development has started on a solar-powered, unmanned aircraft that can fly in the stratosphere continuously for months at a time. The zero-emission aircraft will carry a suite of imagery equipment that will be game-changing for many industries, vastly ... More>>

Stats NZ: Births And Deaths: Year Ended September 2020

Births and deaths releases provide statistics on the number of births and deaths registered in New Zealand, and selected fertility and mortality rates. Key facts For the year ended September 2020: 57,753 live births and 32,670 deaths ... More>>


Forest & Bird: Kākāpō Wins Bird Of The Year 2020

The nation has voted and Aotearoa New Zealand has a new Bird of the Year. New Zealand’s moss-colored flightless parrot has climbed to the top-spot for the second time in Forest & Bird’s annual Te Manu Rongonui o Te Tau/Bird of the Year competition. ... More>>