The New Zealand dollar touched a three-week low against the yen as investors retreated to the haven of the Japanese currency on concerns global growth may be slowing.
The kiwi dropped as far as 87.29 yen early this morning and was trading at 87.42 yen at 8am in Wellington, from 87.60 yen at 5pm yesterday. The local currency slipped to 86.18 US cents from 86.34 cents yesterday.
The yen advanced to its strongest level against the US dollar in three months as US Treasury yields declined, signalling uncertainty about the outlook for US growth. Benchmark interest rates are at record lows in most major economies and the outlook for growth remains uncertain with the European Central Bank expected to provide further stimulus next month and softness emerging in China.
"The Japanese yen continues to strengthen, with some analysts pointing to percolating concerns about softer global growth and inflation," Bank of New Zealand currency strategist Raiko Shareef said in a note. "The implication is that the Japanese yen benefits from a safe haven bid."
The New Zealand dollar advanced to 92.42 Australian cents, from 92.28 cents yesterday after Standard & Poor's was quoted in the Australian Financial Review saying the credit rating agency may "reconsider" Australia's AAA rating unless substantial cuts are made to the deficit in coming years.
Australia's central bank will publish the minutes from its last meeting at 1:30pm New Zealand time today where it is expected to reiterate interest rates will remain on hold. RBA assistant governor, financial markets, Guy Debelle is also scheduled to address a business lunch.
The kiwi fell to 62.88 euro cents from 63 cents yesterday and edged lower to 51.25 British pence from 51.32 pence. The trade-weighted index weakened to 80.17 from 80.27 yesterday.