The New Zealand dollar slowly recovered today after it fell to its lowest level against the greenback in nearly four weeks overnight after a shelling exchange on the Korean peninsula added to the US currency's appeal as a safe haven.The NZ dollar was at U
The New Zealand dollar slowly recovered today after it fell to its lowest level against the greenback in nearly four weeks overnight after a shelling exchange on the Korean peninsula added to the US currency's appeal as a safe haven.
The NZ dollar was at US76.21c at 5pm, up from the US75.90c level it dropped to early today, as it continued its retreat away from the 31-month high around US79.75c reached in early November. At 8am the NZ dollar was buying US76.15c, down from US77.06c at 5pm yesterday.
Asian sharemarkets were mostly weaker today as investors continued to seek safety in the US dollar market.
BNZ markets strategist Mike Jones said news of the Korean artillery exchange this week had scuppered risk appetite, and immediately had an impact on regional currencies and equity indices.
"Just what we needed when the markets were already pressured by concerns that Ireland may not have the political will and ability to see through any rescue agreement," Mr Jones said.
US national security aides met today to develop a response to North Korea's shelling of a South Korean military installation amid concerns that the North Korean provocation from escalating into war.
The US dollar's appeal has also been supported by worries that a rescue package for Ireland will not prevent other heavily indebted European countries from seeking aid.
"We're seeing a knee-jerk reaction to Korea but the underlying story is still the European debt crisis and contagion fears," said John Doyle, strategist at Tempus Consulting in Washington. "That will drive trading for the rest of the month. Korea is a sideshow."
A speech today by New Zealand's Treasury secretary John Whitehead and a submission by the Reserve Bank of New Zealand to the Savings Working Group canvassed long term issues facing the economy but were eclipsed in importance by international events.
After a bumpy night, the NZ dollar was at A77.87c at 5pm from A78.10c at the same time yesterday and it was at 0.5691 euro from 0.5674. It was at 63.45 yen from 64.22.
The trade weighted index was at 68.74 from 69.04 yesterday.
