Dollar falls on renewed euro concern

The New Zealand dollar fell today on worries about the ability of the rescue package for the euro to solve debt issues in that part of the world.

It consolidated at lower levels against sterling, which was bolstered by the formation of a government under Conservative leader David Cameron.

At 5pm the NZ dollar was buying US71.08c from US71.70c at 8am and US71.88c at 5pm yesterday.

"It has been a fairly subdued session overall. Kiwi is being dragged lower by the ailing fortunes of euro," said Mike Jones, currency strategist at BNZ.

He said some investors were concerned that the rescue package for the euro would not stave off the worst of the crisis.

"It's clear that the markets remain very concerned about the fiscal outlook for Europe," said Mike Moran, senior currency strategist at Standard Chartered Bank in New York.

By 5pm the NZ dollar was at 47.80p from 47.97p at 8am and 48.48p at 5pm yesterday.

Sterling rallied sharply this morning when the new government was announced and the NZ dollar dropped to around 48p.

Mr Jones said the trend in next week or so could be for a lower sterling cross rate and there could be a test of 47p in coming days.

Investors were looking to see if the new government was solid and prepared to tackle budget deficits.

The NZ dollar was at 65.77 yen at 5pm from 66.65 yen at the same time yesterday.

The NZ dollar was at A79.95c at 5pm, which was little changed from yesterday.

The trade weighted index slipped to 67.84 at 5pm from 68.28 at the same time yesterday.

- NZPA