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NZ dollar declines as commodities fall

NZ NewswireNZ Newswire 4/04/2016 Tina Morrison

The New Zealand dollar declined as currencies linked to commodity exports fell out of favour as hopes faded that the oversupply of oil will be reduced any time soon.

The kiwi fell to 68.30 US cents at 8am in Wellington, from 68.76 cents at 5pm on Monday. The trade-weighted index declined to 72.27 from 72.67.

Currencies linked to commodity production such as the kiwi and the Aussie declined after oil prices dropped to a one-month low amid doubts that producing countries will freeze output to counter a supply glut.

The Organization of the Petroleum Exporting Countries and other major oil producers are scheduled to meet in Doha, Qatar on April 17 to discuss a plan to rein in supply. However, doubts are growing that agreement will be reached after Saudi Arabia said it will only freeze production if Iran and others follow suit, and Russia reported its highest production in 30 years.

"Weaker commodity prices have seen the commodity currencies underperform," BNZ's Jason Wong said. "Thus, the New Zealand dollar and Australian dollar are the two weakest major currencies."

Later all eyes will be on the GlobalDairyTrade auction and Mr Wong said he isn't anticipating a bounce.

"NZX dairy futures prices have been soft over the last couple of weeks and the weaker global commodity price dynamic over the past week won't help either," he said.

Across the Tasman, the Reserve Bank of Australia is expected to keep interest rates unchanged at 2 per cent.

The kiwi slid to 89.82 Australian cents from 90.06 cents, fell to 59.94 euro cents from 60.40 cents, dropped to 47.88 British pence from 48.33 pence, weakened to 76.01 yen from 76.67 yen, and sank to 4.4242 yuan from 4.4540 yuan.

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