24 Jul 2014

NZ dollar falls after RBNZ warning

6:09 pm on 24 July 2014

The New Zealand dollar fell more than a US cent on Thursday after the Reserve Bank governor, Graeme Wheeler, repeated his warning that the high currency is unjustified.

ANZ senior foreign exchange strategist Sam Tuck said the use of the word unjustified was a key reason the market reacted so strongly.

He said 'unjustified' was a word last used by the Reserve Bank governor in June 2007.

"Unjustified was last used in 2007 four days before the RBNZ intervened in the foreign exchange market."

Mr Tuck said saying the Reserve Bank was 'expecting a significant increase in the fall of currency' was an increase in the rhetoric against the New Zealand dollar.

At about 5pm, the kiwi was trading at 85.85 US cents, down from 87.02 just before Mr Wheeler's statement.

It was also trading at 90.81 Australian cents, 50.40 British pence, 63.78 euro, 87.08 yen and 5.32 renminbi.

Reserve Bank governor Graeme Wheeler.

Reserve Bank governor Graeme Wheeler. Photo: RNZ / Diego Opatowski

NZ shares rise

New Zealand shares rose on Thursday, the benchmark Top 50 Index gaining 28 points to 5175.

JB Were equities manager Rickey Ward said the central banks' statement generated interest in companies that could potentially benefit from a weaker currency.

Pacific Edge rose 4 cents to 70 cents. Xero rose $1 to $24.50. After a strong day, A2 Milk ended steady at 65 cents.

Among the weaker stocks, Ryman Healthcare fell 6 cents to $8.14 and Metlifecare fell 12 cents to $4.28.