Dollar drops to 10-day low vs yen as investors favour safe haven currencies
The New Zealand dollar dropped to a 10-day low against the yen as investors favoured the safe haven Japanese currency amid uncertainty about tensions in Ukraine.
The kiwi fell as low as 86.29 yen this morning and was trading at 86.34 yen at 8am in Wellington from 86.86 yen in Wellington on Friday. The local currency edged lower to 85.25 US cents from 85.34 cents at the New York close and 85.42 cents in Wellington on Friday.
Investors have turned to safe haven currencies such as the Japanese yen and the Swiss franc amid concern about growing tensions between the West and Russia over the future of Ukraine. Traders are awaiting the diplomatic response after a weekend referendum showed 93 percent of participants approved of Crimea joining Russia, in a poll the West says wasn't valid.
"The Japanese yen has continued to benefit from a safe-haven bid," BNZ currency strategist Raiko Shareef said in a note. "The New Zealand dollar will start the week with a negative bias, as results from Crimea's weekend referendum and the international response emerge."
The kiwi will likely trade between 84.50 US cents and 86.05 cents today, according to BNZ.
The local currency fell to 74.39 Swiss francs at 8am in Wellington from 74.76 at 5pm in Wellington on Friday.
In New Zealand today, traders will be eyeing the Westpac consumer confidence report for the first quarter at 10am and the BNZ-Business NZ Performance of Services Index for February at 10:30am.
They will also be watching for any impact from the decision by Chinese authorities at the weekend to widen the trading band for the nation's currency from today.
"Moves to liberalise financial markets are a long-term positive, and in particular freeing up the exchange rate will make it easier to fine tune interest rates as capital flows are liberalised," ANZ senior economist Sharon Zollner and senior FX strategist Sam Tuck said in a note. "But the likely increased volatility may be difficult to digest in the short term."
The New Zealand dollar slipped to 61.32 euro cents at 8am from 61.63 cents at 5pm on Friday, weakened to 51.24 British pence from 51.38 pence and dropped to 94.55 Australian cents from 94.64 cents. The trade-weighted index fell to 79.71 from 79.89 on Friday.