NZ dollar ends week down against greenback

  • 08/04/2016

By Paul McBeth

The New Zealand dollar is heading for a 1.6 percent weekly decline against the greenback amid uncertainty about when the Federal Reserve will resume hiking interest rates in the world's biggest economy.

The local dollar fell to 67.78 US cents at 5pm in Wellington from 68.89 cents last week, when the kiwi jumped to a nine-month high. It traded at 67.78 cents at 8am, down from 68.24 cents on Thursday. The trade-weighted index fell to 71.81 from 72.22 and is heading for a 1.5 percent weekly decline.

Traders have been contending with mixed messages from the Fed, with some officials more upbeat in their assessment of the US economy, which would lead to higher interest rates, while chair Janet Yellen was more circumspect in her outlook, tempering optimism on the timing and pace of hikes.

"There seems to be some pretty strange signals from some of those Fed presidents over the last couple of weeks," said Mark Johnson, senior dealer foreign exchange at OMF in Wellington. "The Fed has a pretty clear message expecting a couple of rate hikes this year, but the issue for the market is they don't know when to price those things in."

The kiwi fell to a seven-month low against the yen on speculation the Bank of Japan won't intervene to halt a rally in the Japanese currency ahead of a Group of Seven nations meeting next month. The local currency dropped to 73.72 yen from 74.43 yesterday.

New Zealand's two-year swap rate slipped one basis point to 2.17 percent, and 10-year swaps declined two basis points to 2.91 percent.

The kiwi increased to 89.87 Australian cents from 89.64 cents on Thursday, and dropped to 4.3907 Chinese yuan from 4.4151 yuan. It decreased to 59.64 euro cents from 59.82 cents, and was little changed at 48.15 British pence from 48.31 pence.