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Kiwi falls as growth misses estimates

Thursday 20 Dec 2012 6:14 p.m.

By Paul McBeth

The New Zealand dollar fell after figures showed the economy grew less than expected in the third quarter, while US policymakers appear bogged near the finish line on talks to avert $US600 billion of automatic tax hikes and spending cuts.

The kiwi fell to 83.26 US cents at 5pm in Wellington from 83.62 cents at 8.30am and 83.91 cents.

The trade-weighted index fell to 74.47 from 74.75.

New Zealand's gross domestic product grew 0.2 per cent in the three months ended September 30, half the 0.4 per cent pace forecast in a Reuters survey and spurred only by a pick-up in construction activity.

The local economy has been showing signs of weakness through the middle of the year, with unemployment rate rising to a 13-year high 7.3 per cent, and the figure cemented the view that future growth is hanging on the Canterbury reconstruction effort.

The local data comes as investors continue to wait for US legislators to cast aside their partisan brinkmanship and reach a deal to avert the fiscal cliff, which will probably send the world's biggest economy back into recession.

Talks between the Democrat White House and the Republican Speaker of the House of Representatives have deteriorated in the past 24 hours, according to a Bloomberg report.

The kiwi fell to 70.28 yen from 70.69 yen after the Bank of Japan expanded its asset purchase programme by 10 trillion yen to 101 trillion yen after voters in the world's third-biggest economy elected a new, more activist government last weekend.

The kiwi dollar fell to 63.10 euro cents from 63.31 cents and declined to 51.32 British pence from 51.57 pence. The New Zealand dollar was little changed at 79.71 Australian cents from 79.73 cents.

NZN

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