Building Approvals Slump in New Zealand

The New Zealand dollar fell significantly against the other currencies today after the release of the report that showed that the home-building approvals in the country declined to the lowest level in almost 22 years in June.
According to a report released yesterday at 22:45 GMT, the approvals fell 20 percent compared to May to 1,337 on a seasonally adjusted basis. That’s the lowest reading for this indicator since October 1986. Excluding apartment units the approvals lost less — only 13 percent comparing to May.
Economy of the New Zealand declined in the first quarter of 2008 and many economists expect it to fall in the second quarter too. With the falling housing sector, the output will also decline as the construction is a crucial part of the economy.
The declining home construction will lead the central bank to the further rate cuts. Reserve bank of New Zealand has already cut its rate from 8.25 to 8 percent this month. Many investors expect at least one more cut by the end of the year. With the recent housing report some traders will bet on more than 0.25 percent cut.
NZD/USD declined from 0.7446 to 0.7404 as of 8:54 GMT today. NZD/JPY went down from 79.99 to 79.68. Australian dollar felt much better than Kiwi and the AUD/NZD currency pair rose from 1.2844 to 1.2908 today.

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