7 May 2012

NZ dollar down

1:50 pm on 7 May 2012

The New Zealand dollar was buying 79.36 US cents on Monday and a currency strategist says it looks likely to continue dropping.

On Friday, the New Zealand dollar dipped below 80 cents against the US dollar for the first time in five months and commentators suggested the European election results could drive it down even further.

Derek Rankin from Rankin Treasury, told Morning Report the French election result is not a surprise for the markets.

Mr Rankin said poor economic data including in New Zealand, the United States and Australia is likely to be driving the drop in a high-risk currency like the New Zealand dollar.

He said the dollar is likely to stablise around 78 cents.

At 8.20am on Monday, the New Zealand dollar was trading at 79.24 US cents, 78.07 Australian cents, 49.15 pence, 63.22 yen and 0.6092 euro. The Trade Weighted Index was at 70.98.

Radio New Zealand's business editor says exporters in New Zealand will welcome the declines, because it means their products are more competitive against international rivals, but many would like to see the exchange rate fall much further.

But consumers may experience higher prices for imported goods.

The Australian dollar has also fallen to its lowest level against the American dollar in four months, to $US1.01.