The New Zealand dollar reached multi-week lows against a range of currencies overnight as risk aversion strengthened on world markets.The kiwi started diving around 4am (NZT) as stocks in the United States traded mixed with good news from several strong e
The New Zealand dollar reached multi-week lows against a range of currencies overnight as risk aversion strengthened on world markets.
The kiwi started diving around 4am (NZT) as stocks in the United States traded mixed with good news from several strong earnings reports tempered by an unexpected jump in initial jobless claims.
Investors were also anxiously waiting for President Barack Obama to speak about his financial overhaul plan, which he announced around 6am with intentions to limit risk taking at certain financial institutions.
Around 8am the kiwi was buying US71.36c from US72.09c at 5pm yesterday, having dropped as low as US71.14c, according to Reuters data, its lowest level this month.
The NZ dollar also dropped to a 2-1/2-week low of 0.5045 euro shortly before the local open from 0.5115 at 5pm.
Similarly the kiwi fell as far as a one-month low 64.26 yen from 65.97 at the local close, dropped to a six-week low A78.69c against the Australian dollar from A79.01c at the local close, and also got to a month low 43.9p against the British currency from 44.3p at 5pm. The trade weighted index fell from 65.83 at 5pm to 65.13 at 8am.
BNZ Capital strategist Mike Jones said the NZ dollar had been the weakest performing currency during the 24 hours to 8am for the second day running.
Global risk appetite, which hit 20-monh highs last week, had soured during the past few days, denting demand for growth sensitive currencies such as the NZ dollar, Mr Jones said.
Not only had Greece's fiscal woes highlighted concerns about sovereign debt, but global equity markets had plunged, with financial stocks hard hit overnight by President Obama's announcement.
Weakness in global equities and a drop in risk appetite had seen investors flock back into safe haven currencies such as the greenback and yen, he said.
The US dollar fell sharply versus the yen and erased gains against the euro after President Obama's announcement, with investors fearing the plans would limit US bank profits.
