The news about the New Zealand dollar plummeting to a two (2) year low is very disturbing. This will make the earning capacity of Filipinos in New Zealand lower. Two (2) years ago at this time of year, the kiwi dollar to Philippine peso exchange rate is 32.13866. At the current forex rate of 30.53469, that is Php 1,600 lower for every thousand  NZ dollar remitted to their families in the Philippines. It will be worse if the rising petrol and consumer goods prices are considered.

NZ dollar down to 2-year low against US$ and Yen

The New Zealand dollar plummeted to a two-year low against the US dollar yesterday after a half percentage point cut in official interest rates.

The Reserve Bank’s decision to make a bigger than expected interest rate cut, down to 7.5 per cent, sent the NZ dollar sliding a cent to around US65.30c soon after the announcement at 9am yesterday.

Then yesterday afternoon and evening the NZ dollar slid further, bottoming around US64.35c shortly before 9pm before clawing its way back to US65.24c by 8am today.

Early today the NZ dollar got down to its lowest level in more than two years against the Japanese currency, around 68.50 yen, before moving up to 69.91 yen by today’s local open.

The low-yielding yen benefited from a surge in risk aversion, which also pushed the euro and the Australian dollar down to their lowest in at least two years.

Against the euro, the NZ dollar reached a month low around 0.4625 overnight, before strengthening to 0.4676 euro.

The kiwi dollar bounced around against the Australian dollar in a range between around A81.65c and A81.25c overnight, buying A81.45c at 8am. The trade weighted index was 62.66 at the local open, compared to 62.63 at 5pm yesterday.

The US dollar scaled a fresh one-year high versus the euro and a basket of currencies overnight, boosted by US investors repatriating overseas investments amid escalating worries about global growth.

But rising risk aversion, data showing an unexpectedly large US trade deficit in July, and signs of further deterioration in the labour market knocked the greenback lower against the low-yielding Japanese yen for much of the time.

Late in the session, the US dollar trimmed losses against the yen after The Wall Street Journal reported that troubled investment bank Lehman Brothers was actively negotiating with potential buyers, including Bank of America.

– NZPA

Kiwi dollar dives below US65c

The kiwi dollar fell to its lowest level against the greenback in two years yesterday after the Reserve Bank cut the official cash rate by 0.5 per cent to 7.5 per cent.

The move surprised economists who had widely expected the rate to be cut by 0.25 and within an hour of the announcement the dollar had fallen from US66.35c to US65.34c. It continued to fall throughout the day and in trading last night dropped to US64.60c.

ANZ head of markets John Body described it as a “pretty dramatic drop”.

He said the second cut in a matter of six weeks meant the dollar had now become a lot less attractive to carry-trade investors.

Investors would also be thinking more about what it meant for future cuts.

“If the Reserve Bank can cut by 50 once, it becomes easier for it to do it again next time.”

He said that between now and October the market would look at the data and price a 50-point cut into the next monetary policy statement and “that will keep the kiwi dollar under pressure”.