Renewed squeeze on the kiwi
4:00AM Tuesday Mar 03, 2009
By Owen Hembry

Downward pressure on the New Zealand dollar will remain strong for the foreseeable future, currency traders said yesterday as the kiwi touched fresh six-and-a-half-year lows below US50c.

The kiwi traded as low as US49.12 - its lowest level since November 2002 - as stock markets fell and traders headed for the relatively safety of the greenback and euro.

The New Zealand dollar peaked at US81c last March and has fallen steadily since. Already this year it has dropped nearly 30 per cent since January.

"The outlook is pretty bleak," said Sydney-based Deutsche Bank currency strategist John Horner.

And while the US was the source of much of the financial woe, Horner said the greenback was unlikely to weaken to reflect this any time soon.

"While things are bad and getting worse, the US dollar will retain that safe haven status. It remains the world's viable reserve currency status. On a longer timeframe, the debts being accumulated now suggest the US dollar will have to weaken but we don't think that's a story for the near term, rather one for when the world does show signs of recovering."

More here.