20 Aug 2013

Dollar drops against US

9:04 pm on 20 August 2013

The New Zealand dollar dropped nearly a cent against the US dollar.

The drop on Tuesday appears to have more to do with the Reserve Bank of Australia's indication of further interest rate cuts than it does our Reserve Bank's move to restrict riskier mortgage lending.

The kiwi has weakened against all its major trading partners.

Bancorp Treasury Services senior client advisor Peter Cavanaugh said the kiwi was dragged lower by the Australian dollar after the Australian central bank left the door open to further cuts in its interest rates.

"It's pushed us higher against the Australian dollar, which shows that the Reserve Bank of Australia's announcement has had a much bigger impact on the New Zealand dollar externally than has what (Reserve Bank Governor) Graeme Wheeler said this afternoon," Mr Cavanaugh said.

The New Zealand dollar was trading at 79.85 US cents at 5pm, compared with about 81.16 this time yesterday. It has dropped from 88.57 Australian cents this morning to 88.1 cents.

Meanwhile, the share market had a mixed day, with the benchmark Top 50 share index rising 5 points to 4508.

Craigs Investment Partners broker Keith Ferguson said the stock exchange operator itself, NZX, was among declining stocks.

"The stock exchange is down a couple of cents but remember it has run about $1.37, where it was prior to its (six-month result) announcement yesterday and it moved through to $1.40, quite good volume for the stock exchange, and it's back at $1.38 today," Mr Ferguson said.

"So it's just some profit taking but that result was seen being as pretty positive for it."