Kiwi dollar falls as US broods over virus, jobs

The New Zealand dollar fell in line with the fallout in equities markets, as the Federal Reserve’s pessimism about the economic impact of the coronavirus crisis and rising infections in some major US states cooled investor enthusiasm.

The kiwi was trading at US64.18c at 5pm yesterday, up from the day’s low of US63.94c but down from US64.92c at the same time on Thursday. On form, the currency is likely to end the week below its US65.07c level in New York a week ago.

The trade-weighted index was at 71.17 from 71.63.

Yesterday’s decline followed a near 6 per cent plunge in the S&P 500 index overnight on Thursday.

Fed chair Jerome Powell said on Wednesday the pandemic could cause permanent economic damage and long-term high unemployment. The fed forecast a 6.5 per cent fall in GDP for 2020 and zero interest rates for at least two years. It signalled willingness to continue multibillion-dollar bond purchases, effectively printing money.

Several states have reported rising cases. New Zealand, however, has had 21 successive days without new infections.

“The catalyst for it last night was supposedly the increasing virus count in some US states,” said Imre Speizer, currency strategist at Westpac.

The kiwi traded at A93.80c from A93.60c on Thursday and at 51.05 British pence from

51.16 pence. It was at 56.82 euro cents from

57.17 cents, 68.76 yen from 69.52 yen and

4.5479 Chinese yuan from 4.5897 yuan. The bid price on the two-year swap was

0.2250 per cent from 0.2350 per cent, while the 10-year swap was at 0.7400 per cent from

0.8000 per cent on Thursday.