Wednesday 20th March 2013 |
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The New Zealand dollar extended its slide after figures showed the current account deficit widened more than expected in the fourth quarter and the bailout impasse in Cyprus kept the US dollar well bid.
The kiwi dollar fell to 82.28 US cents in late New Zealand trading from 82.51 cents immediately before the balance of payments figures. The trade-weighted index fell to 75.78 from 75.92 over the same period.
The current account deficit widened to an annual $10.5 billion in the fourth quarter, or 5 percent of gross domestic product, against expectations of 4.9 percent of GDP. The gap was the widest in three years. Economic growth figures for the fourth quarter are out tomorrow and are expected to show the economy grew 0.9 percent, up from 0.2 percent in the third quarter.
"The current account brings a few things into focus in terms of a worsening external debt position," said Dan Bell, senior trader at HiFX. "The Cyprus story has set the tone for US dollar strength in general."
Cyprus lawmakers rejected the EU's conditions for a 10 billion euro bailout, which included a raid on its citizens' bank deposits. While Cyprus is only a small part of the EU, investors fret it may set a precedent for wider turmoil.
The New Zealand dollar rose to 63.91 euro cents from 63.71 cents a day earlier. It slipped to 54.49 British pence from 54.64 pence.
Traders are now awaiting the Federal Reserve's policy statement for any signs of improvement in the US economy that could signal the end to quantitative easing, which would help the greenback.
"It may try to take a more dovish tone," Bell said. "They do not want people to think they are taking stimulus off the table."
Bell doesn't expect any end to the money printing "this side of Christmas".
The kiwi slipped to 79.31 Australian cents from 79.45 cents the previous day and fell to 78.15 yen from 78.85 yen.
BusinessDesk.co.nz
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