Exporters' belt-tightening continues as the New Zealand
dollar has hit an eight-year high against its counterpart in
Australia, the country's second-largest trading partner.
While providing a boon for travellers, importers and
consumers, the weakening of both the Australian and United
States dollars puts further pressure on exporters' margins as
the kiwi gains strength.
Global economic data, China forecasts, weak overseas stock
exchanges and central bank decisions are all conspiring to
strengthen the kiwi, which in turn is looking more and more
attractive to offshore investors.
Craigs Investment Partners broker Peter McIntyre said an
almost 2% decline in the Dow Jones index in New York on
Friday was followed by the New Zealand dollar hitting A95.31c
during the weekend.
Aside from the Dow's dip, manufacturing data from China came
in below expectations, which saw a selling off of the
''Australia's economy is highly correlated to China with its
commodities from the mining sector,'' he said.
About the same time, Mr McIntyre said the World Bank had
upgraded China's outlook and growth in its gross domestic
product was still expected in the 7% to 8% range.
The Reserve Bank of New Zealand reviews the interest-driving
official cash rate on Thursday, with financial markets split
on whether it will rise from the record low 2.5%.
In mid-December the kiwi hit a five-year high against the
Australian dollar, after Reserve Bank of Australia governor
Glenn Stevens talked down the value of his currency, on the
same day New Zealand's central bank said local rates were
At the time, the kiwi touched A92.46c, up from A91.63c the
The New Zealand dollar touched a two-week low of US82.08c
over the weekend as investors moved away from riskier assets.
It was trading at US82.32c yesterday morning, from US82.11c
at the New York close and US82.81 at at 5pm on Friday,
Investors are favouring so-called safe-haven assets such as
the Japanese yen, Swiss franc, US dollar, US Treasuries and
gold and selling riskier assets, such as the high-yielding
New Zealand dollar and stocks, on concern about emerging
The local currency continued its ascent against the
Australian dollar after Australian central bank board member
Heather Ridout was quoted in the Wall Street Journal on
Friday saying the Australian had not fallen far enough.
''The kiwi/Aussie still looks very buoyant to the upside,''
said Stuart Ive, senior adviser at OMF, who expects the cross
rate may consolidate around 94.50 cents.
"I've said the kiwi is being impacted by an investor ''flight
''People are getting out of their riskier investments which
may be stock market shares or a higher yielding currency and
they are willing to sacrifice the gains that they could
possibly get in there for safety as we enter a relatively
uncertain moment in time,'' he said.
''There are still some adjustments taking place in global
The United States central Federal Reserve has its first
meeting of the year this week and may continue to taper its
$US75-billion-a-month bond-buying programme. Australian banks
were closed yesterday for Australia Day.
The New Zealand dollar touched a seven-week low of 83.91 over
the weekend and was trading at 84.25 yesterday, from 85.67 on
The kiwi touched a three-week low of 59.89 eurocents at the
weekend and was trading at 60.19c at 8am from 60.50c on
The kiwi advanced to 49.94 British pence from 49.77 pence on
Friday. The trade-weighted index slipped to 78.11 from 78.42