The New Zealand dollar extended its decline in local trading after government figures showed the biggest monthly trade deficit in almost five years, and after rotten apple exports into China became the latest unsanitary food consignment to the country’s biggest trading partner.
The kiwi fell to 82.27 US cents at 5pm in Wellington from 82.70 cents at 8am and 83.35 cents yesterday. The trade-weighted index declined to 76.75 from 77.63 yesterday.
New Zealand reported a trade deficit of $1.19 billion in August as falling export milk volumes and a one-off purchase of an offshore drilling rig tipped the balance in favour of exports, according to government figures today. The quarantine of three consignments of apples by Chinese officials after they were found to be rotten added to the downbeat view of New Zealand exports, just a month after the false food alarm over dairy products.
“The kiwi was hit by a double whammy,” said Tim Kelleher, head of institutional FX Sales NZ at ASB Institutional in Auckland. “We had the worst trade deficit on the back of a big drop in milk volumes” and then “we had New Zealand halting some apple exports to China,” he said.
The trade figures were distorted by the arrival of the Kan Tan IV drilling rig to drill oil exploration wells over summer 2013/14, which is counted as an import in the balance of trade. The rig will leave New Zealand waters and appear as an apparent export once it finishes work in local waters.
ASB’s Kelleher said he expects the local currency will find support at 81.50/82 US cents, with selling at 82.75/83 cents.
Fonterra Cooperative Group reported 2013 annual earnings of $1 billion, affirming it missed prospectus forecasts by 7.3 percent, and the dairy exporter yesterday warned the first half of 2014 would be tight, while hiking its forecast payout to farmers.
Investors have been mulling the impact of the Federal Reserve’s decision not to start unwinding its money printing programme last week, which has been debasing the greenback in an attempt to support the recovery in the world’s biggest economy.
The local currency dropped to 87.74 Australian cents at 5pm in Wellington from 88.51 cents yesterday, and sank to 81.19 yen from 82.37 yen. It fell to 61.10 euro cents from 61.76 cents yesterday, and declined to 51.46 British pence from 52 pence.