The New Zealand dollar closed lower today but recovered from its worst levels in overnight trading as investors globally continued to shun risky investments.Investors are also waiting to see if the Reserve Bank holds rates unchanged in an announcement tom
The New Zealand dollar closed lower today but recovered from its worst levels in overnight trading as investors globally continued to shun risky investments.
Investors are also waiting to see if the Reserve Bank holds rates unchanged in an announcement tomorrow, as expected.
ANZ said today that the first hike in the official cash rate was not expected until June.
The NZ dollar was 70.75USc at 5pm from 70.89USc at 9am and 71.11USc at 5pm yesterday. It traded as low as 70.23USc in overnight trading, which was its lowest level since December 23.
Investors continue to worry that global growth could be affected by moves by China to constrain lending. An interest rate decision is also due in the US.
Investors have ditched growth sensitive currencies such as the NZ and Australian dollars in favour of the relative safety of the US dollar and yen as risk aversion rises.
The euro fell to ¥125.53, its lowest level since April 2009, in Asian trading today. The NZ dollar fell to ¥63.09 from ¥63.96 yesterday.
"While worries about the global outlook have kept the NZ dollar fragile so far this week, we continue to think that dips below 70USc will be short-lived," said BNZ senior strategist Danica Hampton.
"China's efforts to curb bank lending are aimed at preventing the economy from overheating, but investors fear slower Asian growth could de-rail the global recovery."
The NZ dollar fell to 78.43Ac at 5pm against the Australian dollar from 78.88Ac at the same time yesterday, and to €0.5026 from yesterday's €0.5040.
News that the Australian consumer price index rose 2.1% in the year to December, slightly higher than market expectations of a 2% increase, was seen as a reason for a new interest rate hike.
The Reserve Bank of Australia's board is due to meet on February 2 to consider its next official rate move.
The trade weighted index was 64.55 from 64.95 at 5pm yesterday.
