New Zealand Dollar Falls for Sixth Day as U.S. Stocks Rally

By Candice Zachariahs

July 23 (Bloomberg) -- The New Zealand dollar fell for a sixth day as U.S. stocks rallied and traders speculated that the central bank may cut interest rates tomorrow.

``A little bit of dollar strength has added to kiwi weakness,'' said Murray Hindley, a currency trader with ANZ National Bank Ltd. in Wellington, referring to the New Zealand currency. ``It's 50-50 on the rate decision, but people are probably going into tomorrow's data short.''

New Zealand's dollar fell 0.4 percent to 75.94 U.S. cents at 8:53 a.m. in Wellington from 76.23 cents in late Asian trading yesterday. The New Zealand dollar bought 81.49 yen, from 81.14.

The kiwi rose 0.3 percent to NZ$1.2789 per Australian dollar, from NZ$1.2831 yesterday when it touched a more than seven-year low of NZ$1.2851.

The Standard & Poor's 500 Index rose 1.4 percent in the U.S. yesterday, while the Dow Jones Industrial Average climbed 1.2 percent after Deutsche Bank AG said financial companies are overcoming credit losses and a drop in oil stoked a record gain in airlines.

Investors speculated that the Reserve Bank of New Zealand may cut interest rates tomorrow for the first time since 2003. New Zealand's benchmark rate is 8.25 percent, the highest of any AAA-rated nation.

The chance of a quarter-percentage point cut to the Reserve Bank of New Zealand's 8.25 percent benchmark lending rate was 48 percent yesterday, from 55 percent on July 21 and 28 percent a month ago, according to an index calculated by Credit Suisse Group based on overnight swaps trading.

Benchmark Rate

Reserve Bank of New Zealand Governor Alan Bollard said June 5 that it's likely he will cut the official cash rate this year as the economy slows.

The kiwi pared yesterday's losses against the Australian dollar before a report that will show inflation in that country accelerated in the second quarter to an annual rate of 4.3 percent, according to the median forecast in a Bloomberg survey of 22 economists. The consumer price index rose at annual rate of 4.2 percent in the prior quarter.

To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net