KEY POINTS:
The New Zealand dollar took another sharp tumble today amid signs of deterioration in credit markets, weakening global shares and the unwinding of carry trades.
US stocks fell for a third day, depressed by fears of more credit losses and concerns that the world's biggest economy may already be in a recession. Asia-Pacific shares followed the lead and that fed through to the New Zealand dollar.
Hurt by writedowns of US subprime mortgages and related securities, banks are increasingly reluctant to extend credit to investors such as hedge funds, triggering a cycle of margin calls and forced selling across many markets.
"There is an enormous amount of credit jitters in the market, weighing on the dollar," said a forex trader at a Japanese trust bank.
But the New Zealand dollar fell more than the greenback. By 5pm, it was down to US79.00c from US79.46c at 5pm yesterday.
The closing level was close to a three-week low and against the Japanese currency the kiwi was down to a seven-week low of 80.10 yen. However, by the close it had recovered to 80.37 yen, a little above yesterday's 81.24 close.
A seven-week low was also hit against the euro early today, down to below 0.5135 from 0.5166 at 5pm yesterday. By 5pm it was at 0.5147.
The NZ dollar did gain against its Australian counterpart, closing on A86.26c from A85.41c at 5pm yesterday.
The trade weighted index dropped to 70.85 from 71.02.
The ANZ bank today said attempts to push the NZ dollar higher overnight were easily thwarted as risk aversion rose.
While the aussie may have been sold off more aggressively than the kiwi, ANZ said it continued to expect the kiwi to underperform its trans-Tasman counterpart.
Currency rates:
NZ dlr/US dlr US79.00c US79.46c
NZ dlr/Aust dlr A86.20c A85.41c
NZ dlr/euro 0.5147 0.5166
NZ dlr/yen 80.37 81.24
NZ dlr/stg 39.38p 39.36p
NZ TWI 70.85 71.02
Australian dollar US91.65 US93.03
Euro/US dollar 1.5354 1.5383
US dollar/yen 101.74 102.24
- NZPA
