Dollar stabilises from overnight fall

The New Zealand dollar drifted today after falling against the greenback on Thursday night as fear stalked world markets again.

By 5pm the NZ dollar was buying US70.45c, down from US70.74c at 8am, which was down from US71.13c at 5pm yesterday.

Dealers said the latest economic data from the United States raised new worries that the world's largest economy is nearly stuck. New US claims for first-time jobless benefits scaled a nine-month high last week, while mid-Atlantic factory activity contracted, unexpectedly, in August for the first time in more than a year.

Imre Speizer, senior currency strategist at Westpac, said the currency had largely moved sideways today after falling overnight in reaction to weak sharemarkets.

The focus is also turning to this weekend's Australian federal election with polls indicating the race is neck and neck.

Mr Speizer said local currencies would rise if the Liberal party won, and be stable if Labor won.

"It is a negative if it is a hung parliament," he said.

Against the Australian dollar, the NZ dollar was A79.18c from A79.23c at 8am and A71.13c at 5pm yesterday.

News that Fonterra is holding its forecast was not a market mover even though it is a big driver of the New Zealand economy.

The NZ dollar fell to 0.5502 euro at 5pm from 0.5560 at the same time yesterday, and to 60.06 yen from 61.04.

The trade weighted index was 65.95 at 5pm from 66.57 yesterday.

- NZPA