New Zealand Herald- Giant US hedge funds are dumping the New Zealand dollar in the foreign exchange market on expectations that its recent plunge has further to run.
Since US sub-prime mortgage and credit market woes spilled over into the forex market last week, the kiwi has lost just over 6 per cent of its value against the greenback as carry trade positions are unwound.
It sank further early yesterday, sliding below the US76c mark to US75.60c on follow-through selling after Friday night’s 2c plunge but bobbed higher later in the day to close at US76.12c.
ANZ head of markets John Body said: “It’s the first time we’ve actually seen US hedge accounts seriously look at short kiwi positions. They’ve refrained from selling the kiwi probably since it was in the US64c to US66c range. Now the Reserve Bank’s gone to neutral and the global environment suggest the kiwi could in fact correct, they’re quite happy to roll the dice again.
“It’s a different dynamic at the moment and it just means there’s a lot more pressure on the top for the kiwi.”
