The New Zealand dollar held near its recent lows after a eurozone bailout plan for Cyprus that includes clipping the island's bank deposits, stoking concern the same demand could occur in nearby nations and spark a run on banks.
The kiwi traded at 82.27 US cents from 82.29 cents at the start of the day and down from 82.72 cents in late New York trading on Friday. The trade-weighted index was at 75.71, from 75.64 earlier in the day and down from 75.85 on Friday.
Traders are pondering the prospects for the effects of the 10 billion euro Cyprus bailout plan spreading to countries such as Spain and Italy as consumers fret their deposits are not safe any longer, which could drive up bond yields.
The Cyprus announcement brought the focus back on to Europe, which is still struggling to find common ground on the region's debt crisis.
"What we're seeing is a general risk-off move, including the New Zealand dollar, which gapped significantly lower at the open following the update from Cyprus," says Stan Shamu, a market analyst at IG Markets.
"In the event Europe's news gets worse in the next few weeks, risk in general will struggle and people will rush back to the US dollar and the yen."
Cyprus's financial strength has been eroded by exposure to neighbouring Greece, and among measures proposed in Brussels is for the nation's savers to forfeit 9.9 percent of their deposits.
Waning risk appetite spread through the Asia Pacific, with most major equity indexes falling.
The kiwi rose to 63.76 euro cents from 63.25 cents on Friday and fell to 54.47 British pence from 54.73 pence. It traded little changed at 79.41 Australian cents and sank to 77.92 yen from 78.80 yen.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- NZ struggling to commercialise good innovation, Israeli entrepreneur says
- No more snubs: Labour and Greens sign up for coalition
- Another loss for MediaWorks newsroom, another gain for RNZ
- Fonterra winds up $109m staff pension scheme inherited from NZ Dairy Board
- New Labour-Greens deal falls short of coalition
Most listened to
- In his Editor’s Insight, Nevil Gibson reveals New Zealand has moved up one place world competitiveness
- Political Editor Rob Hosking on the Labour Greens Cuddle up
- G3 CEO Mark Brightwell on the mail company's expansion plans
- In his Editor’s Insight, Nevil Gibson says the economics and politics of Argentina in the 1950s make interesting parallels with today
- Partners Life founder Naomi Ballantyne tells NBR Radio what Blackstone's investment means for the company's IPO plan