Kiwi weakens against greenback

The New Zealand dollar was slightly weaker against the greenback as the ongoing devaluation in China’s yuan added to concerns about a slowdown in the world’s second-largest economy.

The kiwi traded at US67.73c from US68.14c on Monday. The tradeweighted index was at 73.00 from 73.10.

The People’s Bank of China set the dollar’s midpoint for daily trading at CNY6.7891, compared with CNY6.7593 on Monday, a fresh oneyear low. The PBoC has been setting the yuan’s reference rate lower and providing greater support to lenders. While the moves have been seen a means to limit the fall-out from a trade war with the US, they have also sparked concern about the slowdown in the Chinese economy. Given that China is New Zealand’s largest trading partner “the yuan fix is having a sizeable impact. The fix is lower and the kiwi moves lower” against the US dollar, said Ross Weston, a senior trader at Kiwibank. The kiwi traded at 4.6128 Chinese yuan from 4.6053 yuan. Looking ahead, he said today’s Australian consumer price inflation data will be closely watched. If annual inflation is higher than the median 2.2 per cent in a Bloomberg poll of 26 economists, the kiwi will likely take a tumble against the Aussie, said Weston.

The kiwi traded at 91.82 Australian cents from 91.77 cents.

It was at 75.38 yen from 75.60 yen. The kiwi was at 57.97 euro cents from 58.08 cents and edged down to 51.73 British pence from 51.84 pence. New Zealand’s two-year swap rate was unchanged at 2.13 per cent and 10-year swaps rose 0.5 basis points to 3.05 per cent.