Kiwi falls to two-month low against Aussie

The New Zealand dollar fell to its lowest level against the Australian currency in two months, following yesterday's cautious comments from the Reserve Bank of New Zealand.

From A80.71c at 5pm yesterday, the kiwi fell as low as A80.15c early today, before struggling to A80.40c by 8am.

ANZ bank said support levels had broken and an eventual move by the NZ dollar towards A79.74c should now take place.

The NZ dollar dived on comments made by Reserve Bank Governor Alan Bollard, when he confirmed at 9am yesterday that the official cash rate was going up 25 basis points to 3 percent, as widely expected.

In his statement, Dr Bollard said the pace and extent of further increases was likely to be more moderate than was projected in the monetary policy statement on June 10, and that the outlook for economic growth had softened somewhat.

Within minutes the NZ dollar fell from around US72.85c to a one-week low of about US72c. Overnight the kiwi returned to the US72.85c level before falling away to US72.15c and by 8am was at US72.39c.

BNZ markets strategist Mike Jones said broad-based US dollar weakness overnight had lifted the kiwi off its lows.

Fears about the United States losing its AAA rating also weighed on the US dollar, after ratings agency Moody's called for a "credible fiscal plan" from the US government, Mr Jones said.

The NZ dollar found some support from a decidedly perky aussie, amid market chatter of heavy month-end demand.

The kiwi was down to 0.5536 euro at 8am from 0.5560 at 5pm, and fell to 62.85 yen from 63.08. The trade weighted index was down to 67.35 at 8am from 67.57 at 5pm.

- NZPA