Kiwi dollar heading for a weekly fall

The New Zealand dollar is heading for a 0.1 per cent weekly fall against the greenback as China allowed the yuan to fall further, adding to jitters that the US-China trade skirmish could weigh on Chinese growth.

The kiwi traded at US67.54c at 5pm yesterday versus US67.45c at 8.30am and US67.82c on Thursday. It traded at US67.63c in New York a week ago. The kiwi rose to

4.5829 Chinese yuan from 4.5693 yuan on Thursday.

The People’s Bank of China set the dollar’s reference rate at 6.7671 yuan, guiding the Chinese currency 0.9 per cent lower, Dow Jones Newswires reported. The central bank determines a daily exchange rate and allows trading as much as 2 per cent above or below that level in mainland China. The weaker yuan is seen as giving Chinese products an advantage in US markets, offsetting some of the recent tariff effects.

“Trade wars and currency wars are intertwined . . . it gives it [China] an edge,” said Martin Rudings, senior dealer foreign exchange at OMF. US President Donald Trump, meanwhile, said in an interview with CNBC yesterday that a strong dollar puts the United States at a disadvantage, adding that the Chinese yuan “was dropping like a rock”.

However, concerns that China’s economic growth could be hit by the trade war have weighed on both the kiwi and the Australian dollar.

The trade-weighted index was at 72.83 from 72.89 on Thursday while the kiwi was at A91.67c from A91.41c on Thursday.

The local currency fell to 57.90 euro cents from 58.22 cents on Thursday and traded at

51.82 British pence from 51.86 pence. It fell to

75.79 yen from 76.45 yen. New Zealand’s two-year swap rate was unchanged at 2.13 per cent and 10-year swaps declined 3 basis point to 2.98 per cent.