New Zealand's currency appreciated to a one-week high as traders pared bets that the Fed will increase borrowing costs in August.
The New Zealand dollar climbed to 76.28 U.S. cents from 76.08 cents late June 27. It earlier reached 76.35 cents, the highest since June 23. It has declined 3 percent this quarter and 0.4 percent this year.
New Zealand's dollar gained for a fourth day as futures on the Chicago Board of Trade show a 25 percent chance the Fed will raise its 2 percent benchmark rate by a quarter-percentage point at the Aug. 5 meeting, compared with 40 percent odds a week ago.
The benchmark rate is 8.25 percent in New Zealand, the highest of any Aaa rated nation and 6.25 percentage points higher than the U.S.
Gains in New Zealand's currency may be limited after the nation's home-building approvals fell 42 percent in May from April, adding to signs that the property market is slowing.
Excluding apartments, approvals fell 25 percent from April when they rose 34 percent, Statistics New Zealand said in Wellington today, citing seasonally adjusted figures. The seasonally adjusted figures are less reliable than usual and should be treated with caution, the agency said.
A government report June 27 showed the economy contracted 0.3 percent in the first quarter. At least 8 of 13 economists surveyed by Bloomberg News expect the economy also shrank in the second quarter, putting New Zealand into its first recession since 1998.
RBNZ Governor Alan Bollard said on June 5 it's ``likely'' he will cut borrowing costs from a record 8.25 percent this year because weak growth is slowing inflation. He forecast the economy will rebound in the second quarter.