New Zealand dollar falls as traders profit on crosses

April 20 (BusinessDesk) - The New Zealand fell against most major currencies as investors took yesterday's dip in risk appetite amid heightened sovereign debt fears as an opportunity to book profits on the currency's recent rally.

The kiwi fell 16 basis points on the trade-weighted index of major trading partners’ currencies, and dropped back below 75 Australian cents for the first time in a week.

The local currency also fell against its European counterpart after euro zone PMI data overnight showed the region’s core economies continue to power ahead despite the lingering debt issues surrounding some of the peripheral members.

"The market is still digesting yesterday's news," said Tim Kelleher, head of institutional FX sales New Zealand at ASB Institutional. "More than anything else the kiwi is being pushed around by further profit taking on the crosses."

The kiwi rose to 78.71 U.S. cents from 78.60 cents yesterday, and fell to 68.30 on the trade-weighted index of major trading partners’ currencies from 68.46.

It fell to 74.76 Australian cents from 75.08 cents yesterday, and was little changed 64.84 yen from 66.88 yen.

It fell to 54.85 euro cents from 55.16 cents yesterday, and fell to 48.21 pence from 48.32 pence previously.

Prices stabilised at Fonterra Cooperative Group's online milk powder auction overnight, following declines at the two previous sales. The average price of milk powder rose 0.1% to US$4,293, according to results posted on the globalDairyTrade website.

Chinese policy tightening was again in the spotlight after Peoples' Bank of China Deputy Governor Hu Xiaolian said the world's second biggest economy would continue to use interest rate and exchange rate tools to manage inflation expectations and imported inflation.

The kiwi dollar is likely to trade in a range of between 78.50 U.S. cents and 79 cents, Kelleher said, with strong selling interest on any moves near the topside.

(BusinessDesk)

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