22 Aug 2013

Kiwi falls further

7:31 pm on 22 August 2013

The New Zealand dollar fell about a cent against the US dollar on Thursday.

Westpac Bank currency strategist Imre Speizer says he expects the currency will fall further from here.

He says that will be largely due to expectations that the Federal Reserve will start to wind back its quantitative easing programme.

Mr Speizer says they meet on 17 and 18 September and the market will be nervous right up until the meeting.

ASB Bank external foreign exchange sales head Tim Kelleher says new restrictions by the Reserve Bank on low deposit loans, and signs the US Federal Reserve will start reducing its stimulus programme next month, have prompted investors to sell New Zealand dollars.

While the kiwi has fallen sharply in the last couple of days, Mr Kelleher says it is still within the broad range experienced in the last four months.

The Reserve Bank has described the dollar as overvalued.

Mr Kelleher says the fall against the Australian dollar was a correction after a sharp rise in the last four months. He says the kiwi was also hurt by fears of a nuclear leak in Japan.

On Thursday at about 5.15pm, the New Zealand dollar was trading at 78.40 US cents.

Against the Australian dollar it fell to 87.1 cents from 87.75 cents on Wednesday, and it's down by more than a quarter of a penny to 50.26 British pence, by nearly half a euro to 58.76 and by about quarter of a yen to 77.03.

The stock market had a down day too, the benchmark Top 50 share index falling 22 points to 4530.