19 Jun 2013

Kiwi may drop this week but not for long - ASB

7:20 am on 19 June 2013

The New Zealand dollar may fall further against the US dollar later this week, depending on how the markets react to what the US central bank has to say on Thursday.

However, currency strategists are warning that any weakness is likely to be temporary.

The New Zealand dollar is currently trading just below 80 US cents (as at Tuesday evening), well below the 86.79 cent high it reached in April.

ASB head of external foreign currency Tim Kelleher said the United States Federal Reserve may indicate on Thursday when it will stop printing money.

"We don't expect them to do anything immediately but they may signal at what stage they are going to unwind their quantitative easing."

But Mr Kelleher said he does not expect a change to the actual federal funds rate, "so the interest differential between the US and New Zealand will still maintain itself at the current attractive levels, which will limit the downside of the currency".