The weakening New Zealand dollar has clawed back some ground against the Australian dollar since hitting an 18-year low of A72.90c on Thursday.
While travellers and holiday-makers yesterday would have had to pay $NZ1.37 for $A1, for exporters repatriating funds from New Zealand's largest trading partner, the exchange rate will offer a boost to earnings - exchanging A73c into $NZ1 yesterday.
With a heightened likelihood of a cut to to the Reserve Bank's interest-driving official cash rate (OCR) next week and uncertainty over funding up to $20 billion for earthquake repairs in Christchurch, the kiwi may yet be driven lower, Craigs Investment Partners broker Peter McIntyre expects.
"In the short to medium term, we're likely to be trading closer to A70c than A75c," he said of the six-months ahead.
He forecast a 0.5% cut to the OCR from 3% to 2.5% would remain in place with no change until mid-2012.
While both countries have been hard-hit by significant, devastating, multibillion-dollar natural disasters in recent months, Australia maintained better economic growth outlooks and its Government has moved swiftly to find ways to fund rebuilding of the devastated areas, he said.
Mr McIntyre, along with the majority of analysts, is picking the Reserve Bank will next Thursday cut the OCR by 0.5% in an effort to stimulate some spending.
"While this is good news for those resetting mortgages, it means lower returns for those with deposits," he said.
In an unusual move so close to a Reserve Bank monetary policy statement, in anticipation of an OCR cut 16 mortgage lenders including the major banks have since Tuesday already made cuts to their rates.
Mr McIntyre noted investors were already leaving investments using the New Zealand dollar in preferance for Australia as yields there were at present 1.75% higher than in New Zealand, but a 0.5% cut to our OCR will see that range increase to an even more attractive 2.25%, he said.
