Jan. 28 (BusinessDesk) – The New Zealand dollar was firm during the weekend but started drifting off on Monday with trading reduced by holidays in Auckland and Australia.
The kiwi was at 83.50 US cents at 8am, little changed from 83.63 cents at 5pm on Friday.
It rallied off lows during the weekend when worries about the health of European banks eased.
The euro hit an 11-month high versus the dollar on Friday after the European Central Bank said banks would pay back a greater-than-expected 137 billion euros in loans next week, a sign of strength in the financial system, Reuters reported.
“Banks are repaying money because they don’t need it. They can get it cheaper elsewhere,” one dealer said.
The kiwi fell to 62.15 euro at 8am from 62.60 on Friday.
The dealer said the focus was on the official cash rate decision by the Reserve Bank of New Zealand (RBNZ) on Thursday and payrolls data in the US later this week.
The story about fertiliser companies taking a nitrate inhibitor out of their products after it was found in milkpowder was also in the back of traders’ minds as it had been reported internationally.
The RBNZ is expected to keep the official cash rate unchanged.
“They will potentially make a comment on the kiwi and again express their frustration,” the dealer said. “But they can’t do anything.”
The impact the high kiwi is having on the manufacturing sector will also be highlighted at an inquiry into manufacturing by Opposition parties at Parliament today.
The kiwi was at 76.06 yen at 8am from 75.67 yen at 5pm on Friday.
It was at 80.24 Australian cents from 80.08 cents at 5pm on Friday and was at 53.01british pence from 53.02 pence on Friday.
The trade-weighted index was at 75.33 from 75.42.