WELLINGTON: The New Zealand dollar was little changed on Monday, finding support from firmer stock markets in the face of more weak economic data and
comments from the prime minister that the currency could fall further. The kiwi was off its session high but held comfortably above $0.5300 as strong gains across regional equity markets made investors slightly less risk averse.
"Global risk aversion, which is reflected by US equity markets, among other indicators, will continue to drive the NZ dollar," said Westpac senior market strategist Imre Speizer in a market note. At 0400 GMT, the kiwi was at $0.5322/28 compared with $0.5335/40 in late local trade on Friday, having traded a $0.5337 to $0.5381 range. A sprinkling of local data had little impact on the currency.
The volume of residential building work put in place fell to a six-year low in the third quarter, falling 7.9 percent on the previous quarter, but partly offset by a 5.8 percent rise in non-residential work. [nWEL407223] The data, while weak, was judged as better than expected and limiting the downside risk to third-quarter gross domestic product.
In other data, government agency Quotable Value said its house price index fell 6.8 percent in the year to November, the same rate of decline as October. The first time since August 2007 that the index had not fallen on the previous month.
"Most of the 6.8 percent decline in annual values occured during the winter months and we may be seeing signs of a slight spring recovery," QV spokesman Blue Hancock said in a statement. The market was also unmoved by comments from Prime Minister John Key, a former foreign exchange dealer, that the NZ dollar was likely to fall below $0.50 next year.
"It's a reflection of the fact that interest rates drive the exchange rate, and interest rates were cut aggressively, which was a good thing, on Thursday," he told TVNZ, adding that the recession hitting the NZ economy was likely to be shallow. New Zealand bonds closed a shade softer, giving up an early firm tone. The
