The New Zealand dollar touched a five-month low as investors sold riskier assets on concern emerging markets and so-called risk assets will falter should global growth slow.
The kiwi touched 80.61 US cents over the weekend, its lowest since Sept. 11 last year. The local currency was trading at 80.73 cents at 8am in Wellington from 80.85 cents at the New York close and 81.50 cents at 5pm on Friday. The trade-weighted index slipped to 76.84 from 77.25 on Friday.
An MSCI index of emerging market stocks has dropped about 5 percent so far this year on signs China's economy may be losing steam.
The New Zealand dollar has weakened since Reserve Bank governor Graeme Wheeler last week kept interest rates on hold, disappointing some traders who expected a hike. Investors who had been holding the higher-yielding kiwi in anticipation of an early hike are now selling down their holdings as they price in the risk from emerging markets.
"Downward momentum in the NZD/USD continued as equities, and riskier assets generally, struggled," Kymberly Martin, markets strategist at Bank of New Zealand, said in a note. "Global risk appetite may have the final say on NZD/USD direction near-term."
A convincing break below 80.80 US cents would open the way for a pullback toward 80 cents and beyond, Martin said.
