10 Dec 2009

NZ dollar expected to keep falling

9:02 am on 10 December 2009

Currency experts believe the New Zealand dollar will continue to fall, as market corrections continue well into the New Year.

The kiwi fell to a one-week low Wednesday, dipping below the 71 US cent mark to around 70.7 US cents, due to investor fears about the global economy.

A string of poor company results, and worries about the financial health of Greece and Dubai cause global markets to sink into the red on Wednesday.

This is prompting investors to sell riskier currencies like the kiwi, in favour of the US dollar.

BNZ Capital foreign exchange head Mike Symonds says the recent dip is no surprise.

Westpac market strategist Imre Speizer says it's not just the kiwi that is undergoing a correction: commodities, equities and gold are also "running out of steam".

Both say the Reserve Bank's decision on the Official Cash Rate on Thursday is unlikely to have much effect on the kiwi, as most analysts expect rates to be held at 2.5% until at least March next year.

At 6.25am on Thursday, the New Zealand dollar was trading at 70.97 US cents, 78.48 Australian cents, 43.76 pence, 62.36 yen and 0.4828 euro. The Trade Weighted Index was at 63.80.

Brent crude oil was trading at $US73.92 per barrel. Gold was trading at $US1130.25 per ounce.