The New Zealand dollar, which hit a post-float high of US88.43c last month, could fall as low as US72c against the greenback over the next few weeks, according to the NZ Herald, quoting a currency expert.
The kiwi suffered a heavy sell-off overnight Thursday (Sep 22, 2011) amid renewed fears over the health of major world economies, falling from above US82c to below US78c on Friday.
Global equity markets also fell sharply yesterday, with the US’ Dow Jones falling 3.51%.
Westpac senior markets strategist Imre Speizer said any news that suggested a resolution to Europe’s sovereign debt crisis could stem the New Zealand dollar’s fall towards US72c. But such news was unlikely. He added that he did not expect any positive news from European policy makers, and therefore from markets.
The biggest driver in the New Zealand dollar’s plunge against the greenback was indication from the US Federal Reserve that America’s economic outlook looked bleaker than initially thought.
Negative economic data came from other parts of the world, with a survey in Europe indicating a recession could well be on the cards.
A Chinese manufacturing survey also raised the prospect of a slowdown in the Asian superpower.
Finance Minster Bill English told Radio New Zealand’s Morning Report programme yesterday that the New Zealand dollar had been too high for too long.
He said having the kiwi fall back to 70c-level would give exporters, who are under pressure, some relief and the prospect that we can look forward to more growth in the future from exports.
ExportNZ executive director Catherine Beard said exporters would welcome the New Zealand dollar dropping below US80c.
Beard said companies would be concerned that the New Zealand dollar could soon return to higher levels against the greenback.
Speizer said that if the fears driving the sell-off of risk currencies like the New Zealand dollar turned into reality, that could be bad news for this country’s economy.
“I suppose what the aussie and kiwi currencies are saying is that if the global outlook continues to deteriorate it’s not just going to be a debt crisis, it’s going to be a global economic crisis again.”
Source: NZ Herald
