The New Zealand dollar fell against a greenback that strengthened as doubt about Ireland's ability to repay its debts spread, driving the euro lower against the US and Japanese currencies.Europe's woes diverted attention from a G20 summit in South Korea,
The New Zealand dollar fell against a greenback that strengthened as doubt about Ireland's ability to repay its debts spread, driving the euro lower against the US and Japanese currencies.
Europe's woes diverted attention from a G20 summit in South Korea, where discussion was expected to include exchange rate policies and global economic imbalances, though few investors expect a sweeping agreement.
By 8am the NZ dollar was buying US77.98, down from US78.64c at 5pm yesterday. Against the European currency the kiwi was little changed at 0.5707 euro.
BNZ markets strategist Mike Jones said positive sentiment towards the NZ dollar evaporated overnight, with Irish borrowing costs hitting record highs as investors fretted over Ireland's ability to impose crippling fiscal austerity measures.
An associated souring in global growth sentiment saw modest declines in global equity markets, commodity prices fell and risk appetite dried up, Mr Jones said.
Rising risk aversion bolstered demand for the "safe haven" of the US dollar at the expense of the euro, and NZ and Australian dollars.
ANZ said the NZ dollar was back within a more realistic range this morning, having reversed an overextension on the topside.
It did not expect much from the G20 meeting, ending later today, that would add positive support for the NZ dollar.
A spike in Irish yields and decline in German ones as investors seek shelter in German bonds has happened as US yields turned higher, lifted partly by a string of strong US economic data, including last month's employment report. That makes holding the US dollar more attractive.
The NZ dollar was down to 64.37 yen at 8am from 64.60 at 5pm, and little changed at A78.15c against the aussie. The trade weighted index fell to 69.43 from 69.69.
