NZ dollar weakens but no more wild moves
The New Zealand dollar weakened overnight but avoided any more of yesterday's wild moves.
The New Zealand dollar weakened overnight but avoided any more of yesterday's wild moves.
By 8am the kiwi was buying US71.81c against the greenback, down from US72.23c at 5pm yesterday, and also fell to 56.78 yen from 57.08.
Yesterday morning the NZ dollar had plunged from US72.80c to a 6-1/2-month low around US71.20c, as it got caught up in a chain of events reacting to a rise by the yen to a record high against the US dollar.
The greenback hit a record low of 76.25 yen on trading platform EBS as Asian trading began after a break of the previous record low of 79.75 triggered a cascade of automatic "sell" orders.
The US dollar later bounced back to hover around 79 yen, and it is thought the surge in the yen will be discussed today on a conference call among Group of Seven finance ministers.
The yen had seen steady buying since last week's catastrophic earthquake and tsunami, as Japanese and international investors closed long positions in higher-yielding, riskier assets such as the Australian and NZ dollars, funded by cheap borrowing in the Japanese currency.
ANZ said yesterday's trading had been epitomised by illiquidity and irrationality delivering substantial moves. The yen movements had driven the kiwi extremely close to critical support at US71.08c.
That level held but corrective attempts overnight were muted at best, ANZ said.
Offshore sentiment shifts would be critical in determining whether key support at US71.08c would stay in place.
The NZ dollar dropped against its Australian counterpart to A73.23c at 8am from A73.68c at 5pm, and was down to 0.5125 euro from 0.5188. The trade weighted index fell to 63.34 at 8am from 63.88.
NZPA
Fri, 18 Mar 2011
Fri, 18 Mar 2011
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NZ dollar weakens but no more wild moves
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