The Kiwi dollar has hit a six-year low against the US dollar today, as markets continue to be buffeted by China’s surprise move to devalue its currency.
China’s central bank yesterday devalued the yuan by 1.9 per cent, in what it says was a one-off bid to make it more responsive to market forces and boost its exports.
The yuan fell further today, hitting a four year low, prompting some to fear that it could spark a currency war between countries trying to prop up their weak export sectors.
New Zealand’s dollar fell briefly below 65 US cents today, with some investors likely to be viewing the move as negative for New Zealand given it has a high level of exports to China, and the move will push the Kiwi up against the yuan.
Prime Minister John Key seemed unfazed by the move, saying China is going through an economic slowdown and it has a lot of levers it can pull and this is one of them.