KEY POINTS:
The New Zealand dollar closed well bid today despite fresh weakness in equity markets that dampened demand for carry trade currencies like the kiwi.
It closed virtually on its opening at US79.43c and slightly up on yesterday's US79.15c close.
The US dollar fell against major currencies after unexpectedly weak profits from Bank of America dampened investors' optimism that US financial companies may escape the pinch of the crisis in global credit markets.
In Europe, hawkish European Central Bank inflation comments supported the euro after ECB Governing Council member Klaus Liebscher said there was no reason for pessimism on euro zone growth, suggesting the ECB will maintain interest rates at a six-year high.
Bank of New Zealand currency strategist Danica Hampton said the kiwi had been squeezed to an overnight high around US79.70c, but the time above US79.50c was short-lived.
Renewed concern about the credit crisis weighed on US stock markets and risk appetite, which in turn tempered demand for high yielding currencies such as the NZ dollar, she said.
A pull back in commodity prices added to the weight on commodity exporting currencies, including the Australian, Canadian and New Zealand dollars.
The kiwi spiked overnight to a five-week high against the yen, above 82.50 yen but it fell back to 81.86 yen at the close.
Against the Australian dollar the kiwi was buying A84.28c at 5pm, unchanged from yesterday's close. The trade weighted index ended the session on 70.40 from 70.26 at 5pm yesterday.
Reuters currency rates:
NZ dlr/US dlr US79.43c US79.15
NZ dlr/Aust dlr A84.28c A84.29c
NZ dlr/euro 0.4993 0.4999
NZ dlr/yen 81.86 82.17
NZ dlr/stg 40.08p 39.57p
NZ TWI 70.40 70.26
Australian dollar US94.25c US93.90c
Euro/US dollar 1.5912 1.5830
US dollar/yen 103.00 103.82
- NZPA
