The New Zealand dollar continued to lose against other currencies today (except the U.S. dollar) as the economy contracted in the first quarter and the expectations that the central bank will cut the interest rate rose.
Although, the New Zealand currency is rising today against the U.S. dollar, its still going down sharply against the yen, euro, and Australian dollars. It will probably end the week in the negative zone against those three currencies.
The gross domestic product fell 0.3 percent in the first quarter of 2008 in New Zealand showing that the 8.25 percent interest rate is pressing hard on the countrys economy. Output contraction may play a significant role at the next Reserve Bank of New Zealand monetary policy meeting.
Currency analysts now await at least 1 percent rate cut by the end of this year. Last several years high interest rate was one of the major reasons for NZDs attractiveness on the currency market.
NZD/USD started the week at 0.7607 and is now trading at 0.7592 as of 9:22 GMT, it would be a deepr drop if not for todays growth for about 45 pips. NZD/JPY opened at 81.52 this week and is closing near 80.65. AUD/NZD rose from 1.2528 to 1.2660 this week reaching its highest peak since July 2001.
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