Kiwi loses ground against the aussie and sterling yesterday

The New Zealand dollar lost ground against the aussie and sterling yesterday, after dairy giant Fonterra lowered its forecast payout due to weak prices.

• Overnight the kiwi also fell sharply after the New Zealand government’s budget announcement.
  
• Unveiling its budget for the coming year, the government said it would post its biggest budget deficit in 25 years and expects to remain in the red for up to 10 years, which would see debt more than doubling.
  
• The government will raise borrowing and move to rein in spending, including scrapping tax cuts, in a budget aimed at supporting the recession hit economy but staving off a possible credit rating downgrade.
  
• The New Zealand dollar fell sharply immediately after the budget, but has recovered much of the lost ground this morning as investors speculate that the measures may be enough to prevent a ratings downgrade.