You are using an older browser version. Please use a supported version for the best MSN experience.

Kiwi plunges as US rate speculation grows

NZ Newswire logoNZ Newswire 2/03/2017 Jonathan Underhill

The New Zealand dollar has extended its decline to a seven-week low as growing speculation the US Federal Reserve will hike interest rates this month.

The kiwi dollar fell to US70.54 cents and earlier touched US70.46c, the lowest since January 12, from US71.33c late Thursday. The trade-weighted index fell to 77.34 from 77.90.

The US dollar index rose to its highest level since early January as a third Fed official this week, Fed governor Lael Brainard, said tighter monetary policy "will likely be appropriate soon".

Her comments follow those of New York Fed president William Dudley and San Francisco Fed president John Williams, who both indicated a rate hike made sense.

"The countdown is now on to Yellen's speech, which in all likelihood will determine whether the market has been correct in pushing odds of a March hike to close to 100 per cent, therefore boosting the USD," said ANZ senior economist Philip Borkin.

"Perhaps the more important questions then are what the Fed does with its dot-plots and whether we also need to start considering prospects and timing of a potential unwind in asset purchases."

The dot-plots are in the Federal Open Market Committee's Summary of Economic Projections and show where members see the fed funds rate over the next few years.

Locally on Friday, traders will be watching figures on the value of building work put in place for the fourth quarter, to round out their view of the state of activity in the property market.

On Friday morning, the New Zealand dollar traded at 93.22 Australian cents from A93.18c. It fell to 57.57 British pence from 58.10p and declined to 67.16 euro cents from 67.73c. It fell to 80.78 yen from 81.28 yen and dropped to 4.8579 yuan from 4.9096 yuan.

image beaconimage beaconimage beacon