Kiwi dollar falls against greenback

The New Zealand dollar is heading for a 5.4 per cent decline against the greenback for 2018.

It traded at US67.05c yesterday, largely unchanged from Friday, and down from US70.86c at the start of 2018. The trade-weighted index was at 73.28 from 73.37 last week.

The greenback spent much of 2018 on the rise as robust economic growth at the start of the year supported what was seen as an aggressive rate-hiking programme at the US Federal Reserve. The Fed ended up raising the federal funds rate four times, finishing 2018 in a 2.25-to-2.5 per cent band. But growing fears about the potential impact of an all-out trade war between China and the US saw investors rein in their expectations for rate hikes next year.

“We had four hikes this year, but hikes in 2019 and beyond have been pared back significantly as time has gone on,” said Mike Shirley, an FX and interest rate sales dealer at Kiwibank. “The kiwi drifted lower for most of the year then started to recover.”

New Zealand’s two-year swap rate fell 1 basis point to 1.96 per cent and is down from 2.2 per cent at the start of 2018, while 10-year swaps fell 3 basis points to 2.64 per cent, and have dropped from 3.13 per cent.

The kiwi fell to 73.97 yen from 79.82 yen at the start of 2018, while it has climbed to 95.20 Australian cents from 90.81 cents. It fell to 4.6086 Chinese yuan from 4.6104 yuan and to 58.61 euro cents from 59.04 cents at the start of the 2018. It rose to 52.84 British pence from 52.42 pence.