Thursday 23rd May 2013 |
Text too small? |
The New Zealand dollar fell to an eight-month low after figures indicated Chinese manufacturing shrank this month and Federal Reserve chairman Ben Bernanke told politicians quantitative easing could be tapered off if the world's biggest economy keeps getting better.
The kiwi fell as low as 80.15 US cents, trading at 80.26 cents at 5pm in Wellington from 80.69 cents at 8am, tumbling from 81.47 cents yesterday. The trade-weighted index sank to 76.06 from 76.82.
HSBC's purchasing managers' index showed a preliminary reading of 49.6 in May, where a reading below 50 indicates contraction, adding to signs China's economy is slowing. That came after Bernanke told the Joint Economic Committee of Congress if the Fed sees sustainable improvement in the labour, "we will in steps respond to that by reducing the amount of accommodation in a way that's appropriate."
The prospect of the Fed unwinding its $85 billion a month asset purchase programme has underpinned gains in the greenback and the Chinese data "exacerbated the moves a bit more," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "The kiwi is heading towards 79.20 US cents, that's the next big level and we might see that in days."
Speizer said the kiwi dollar will likely come under pressure in coming months as local data shows up the impacts of the North Island drought, which is forecast to trim 0.7 percentage points from gross domestic product this year.
The next major local event is the Reserve Bank's monetary policy meeting on June 13, where analysts will get an update on where governor Graeme Wheeler sees the economy. The bank has to contend with competing interests where a strong currency eating into export receipts while at the same time a heating property market is encouraging banks to write risker mortgage loans.
The local currency dropped to 82.44 yen from 83.56 yen yesterday and was little changed at 82.21 Australian cents from 83.29 cents. It sank to 62.46 euro cents from 63.06 cents yesterday, and fell to 53.39 British pence from 53.61 pence.
BusinessDesk.co.nz
No comments yet
Second St John withdrawal of labour takes effect tomorrow with further strikes likely
Sanford Appoints Independent Director
CRP ADVISES CLOSURE OF SHARE OFFER TO EXISTING INVESTOR
Devon Funds Morning Note - 14 August 2024
OCR 5.25% - Monetary restraint tempered as inflation converges on target
Consumers still need due diligence as new deposit takers emerge.
Woolworths strike: staff asked to dress up in Disney costumes for a week on their own dollar
Turners Invests in Quashed Online Insurance Platform
PGW Reports on Challenging Year
Arvida Announces Executive Team Changes