Kiwi slips as greenback strengthens

The New Zealand dollar fell against a broadly stronger US dollar after the European Central Bank said it was in no hurry to end quantitative easing measures, although the local currency is still on track for a 1.2 per cent weekly gain.

The kiwi was at US71.72c at 5pm yesterday from US72.40c late on Thursday. The tradeweighted index slipped to 77.20 from 77.58.

The ECB kept its policy settings unchanged, with a refinancing rate at zero. President Mario Draghi said the bank would probably “taper” its QE measures, which Bloomberg reported as meaning the stimulus programme could run beyond its March 2017 end date. By contrast, the US Federal Reserve is flagging an interest rate hike before the end of the year. The US dollar index rose to an eight- month high.

“A strong US dollar across the board was the major theme of the day,” said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. The kiwi “may have been looking a little overvalued compared with some of the other currencies”.

The kiwi got an early boost this week with stronger- than- expected inflation figures for the third quarter and then weaker- thanexpected Australian labour market data, which lifted the local currency against its Australian counterpart. It trimmed those gains ahead of Labour Weekend.

The kiwi traded at A93.97c, down from A94.34c on Thursday, which was the highest since October 10.

The Kiwi dollar fell to 58.59 British pence from 58.90p on Thursday. It slipped to 65.75 euro cents from 65.96c and fell to ¥ 74.69 from ¥ 74.96. The kiwi declined to 4.8446 yuan from 4.8773 yuan.

New Zealand’s two- year swap rate fell 1 basis point to 2.04 per cent and 10- year swaps fell 2 basis points to 2.69 per cent.