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Kiwi hits three-week low

NZ Newswire logoNZ Newswire 7/08/2017 Jonathan Underhill
The dollar is down. © Mark Coote The dollar is down.

The New Zealand dollar has fallen to a three-week low as traders took a weaker inflation reading from the Reserve Bank's survey of expectations as evidence the bank will lag behind its global peers in hiking interest rates.

The kiwi dollar traded at US73.54 cents as at 8am on Tuesday in Wellington from US73.99c late Monday. The trade-weighted index fell to 77.56 from 77.93.

The New Zealand dollar has fallen 2.7 per cent from its recent high on July 27, when it touched its highest level in more than two years. Traders have reduced their bets that the local currency could push higher because the RBNZ's monetary policy statement on Thursday is expected to project little increase, if any, in interest rates in coming years.

"The fall likely reflects traders reducing (extreme) net long positions ahead of the MPS, which isn't expected to be supportive to the NZD, with inflation tracking lower than the RBNZ projected back in May," BNZ currency strategist Jason Wong said.

"We suspect further downside lies ahead, with that view possibly supported by a well-overdue recovery in the USD after months of broadly based weakness."

On Tuesday morning, the kiwi fell to 92.94 Australian cents from A93.20c late Monday. It declined to 56.43 British pence from 56.65p and was at 4.9451 yuan from 4.9740 yuan. It dipped to 62.35 euro cents from 62.72c and fell to 81.44 yen from 81.90 yen.

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