WELLINGTON: The New Zealand dollar extended its decline from a three-week high on concern the Federal Reserve’s unwillingness to raise interest rates last week suggests both the US and the global economy are weaker than expected.
The kiwi fell to 63.57 US cents as at 5pm in Wellington from 63.93 cents in late New York trading on Friday. The kiwi reached as high as 64.55 cents in New York, a three-week high. The trade-weighted index fell to 68.61 from 69.03.
Equity markets fell across Asia today, following declines on Wall Street on Friday after the Fed delivered a more dovish message than expected and kept interest rates near zero.
The Fed pointed to global growth concerns, seen as a reference to a slowing Chinese economy, but chair Janet Yellen also emphasised that inflation and some broad measures of employment in the US weren’t quite as strong as was needed to hike rates last week.
“The fact that the Fed wasn’t able to raise rates is quite negative for the global economy,” said Angus Nicholson, market analyst at IG Markets in Melbourne.
“The US economy hasn’t been doing as well as had been hoped. The base case scenario (for a Fed hike) has now moved to December and there’s a lot of commentary that they may have to wait for 2016.”
