NZ dollar falls on global risk aversion
The New Zealand dollar continued its fall against the greenback for much of the night, following yesterday's lower than expected inflation figures and in the face of a bout of risk aversion on world markets.
The New Zealand dollar continued its fall against the greenback for much of the night, following yesterday's lower than expected inflation figures and in the face of a bout of risk aversion on world markets.
After briefly topping US80c for the first time in three years early yesterday, the NZ dollar was down to US79.34c at 5pm, dropped to around US78.40c early today, then regained some lost ground to US79.10c at 8am.
Amid mounting concerns that Greece would be forced to restructure its debt, the euro slid more than 1 percent against the US dollar, suffering its worst one-day drop since November.
Another factor hurting the euro was anti-aid sentiment in Europe, which showed signs of growing.
Rampant risk aversion generally weighed on the euro zone's single currency even as Standard&Poor's revised its outlook on the United States' long term rating to negative from stable but affirmed its 'AAA A-1+' sovereign credit rating.
An actual ratings downgrade of US debt would be negative for the US dollar, but most believe S&P's announcement was a warning and therefore it did little to rattle the greenback's performance against the euro.
BNZ currency strategist Mike Jones said global risk appetite was sapped overnight, with global stock markets notching up heavy losses and commodity prices falling sharply.
Led by a weaker euro against the greenback, the NZ dollar was dragged lower against the US currency as investors sought the relative safe haven of currencies such as the yen and, "rather perversely", the US dollar.
By 8am today the NZ dollar was around two-month highs against the European currency at 0.5558 euro, up from 0.5519 at 5pm.
The kiwi dropped to 65.42 yen at 8am from 65.70 at 5pm, and edged higher to A75.24c against the Australian dollar. The trade weighted index was slightly higher at 68.85 at 8am from 68.82.
NZPA
Tue, 19 Apr 2011
Tue, 19 Apr 2011
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NZ dollar falls on global risk aversion
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