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N.Z. Dollar Near 1-Week Low as Inflation Slows, Commodities Fall

New Zealand’s dollar traded 0.4 percent from a one-week low after data showed consumer prices rose at the slowest annual rate in a year and a half.

The so-called kiwi remained lower following a decline yesterday on speculation the Reserve Bank of New Zealand will refrain from raising its benchmark lending rate for longer. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, slipped to 2.895 percent, a level unseen since Feb. 16. The Australian dollar stayed lower after dropping yesterday as raw material prices slid, reducing demand for the currencies of commodity exporters.

“With consumer prices at these levels, it’s unlikely the Reserve Bank of New Zealand will increase interest rates any time soon,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., which provides currency margin-trading services.

New Zealand’s dollar was at 81.77 U.S. cents at 9:52 a.m. in Sydney from 81.59 yesterday in New York, when it touched 81.46 cents, its weakest level since April 11. The kiwi bought 66.45 yen from 66.30.

The Aussie dollar traded at $1.0379 from $1.0359 yesterday, when it fell 0.3 percent. It was at 84.39 yen from 84.17.

New Zealand’s consumer price index increased 1.6 percent in the first quarter from a year earlier, the country’s statistics bureau said today in Wellington. That was the slowest annual pace since the third quarter of 2010 and matched the median estimate of economists surveyed by Bloomberg News. Prices rose 0.5 percent over the previous quarter, also in line with forecasts.

Swaps traders are betting the RBNZ will lift interest rates by 11 basis points over the next year, according to a Credit Suisse Group AG index. (CRY) That’s less than the 36 basis points of increases indicated on March 22. The central bank’s benchmark is at 2.5 percent, a record low.

Thomson Reuters/Jefferies CRB Index of raw materials fell 1 percent yesterday.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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