The New Zealand Dollar has copped an almighty pummeling over the past 24 hours, falling 2% from Wednesday’s opening.
Three factors contributed to the Kiwi’s demise overnight:
- A stronger US dollar
- Another weak GlobalDairyTrade (GDT) auction, down a whopping 10.7% from levels of two weeks ago;
- And general commodity currency weakness, partly on the back of the Bank of Canada’s decision to cut interest rates to 0.5%.
Then, this morning, just when we thought it couldn’t get any worse for the beleaguered Kiwi, June quarter CPI came in below market expectations, rising just 0.4% over the quarter compared to expectations for an increase of 0.6%.
It has taken a huge toll on the once high-flying dollar.
Following the release of the inflation print the NZD/USD exchange rate tumbled to .6557, the lowest level since mid-2009.
On April 29, only 56 sessions ago, the Kiwi bought 77.44 US cents. Since then, the currency pair has fallen over 11.5c, or 15%.
While the Australian dollar wasn’t spared the carnage overnight — it fell to as low as .7351 against the US dollar, a level last seen in May 2009 — it performed significantly better against its antipodean counterpart.
At present the AUD/NZD exchange rate buys 1.1213, up 1.06% from yesterday’s open and some 11.68% higher than levels seen in late April, a time when parity between the two currencies was being contemplated by many.
The decline in both the Kiwi and Australian dollars will please both Glenn Stevens and Graeme Wheeler, the RBNZ governor, who are both actively championing further declines in their respective currencies.
It may also please Australian powder hounds and snow bunnies who are looking for a cheap ski holiday in New Zealand.