The New Zealand dollar dropped to a five-week low against the Russian ruble as political tensions eased in Ukraine following conciliatory comments from Russian president Vladimir Putin.
The kiwi touched 30.24 ruble this morning, and was trading at 30.27 ruble at 8am in Wellington, from 30.80 ruble at 5pm yesterday. The local currency slid to 86.69 US cents from 86.88 cents yesterday after Reserve Bank governor Graeme Wheeler said he may sell the kiwi which he considers overvalued.
The Russian currency advanced, the nation's equities rallied and its government bond yields fell after Putin called on separatists in eastern Ukraine to postpone Sunday's referendum on independence for the mostly Russian-speaking region. Putin also said Moscow had withdrawn troops from the border with Ukraine, which had been a source a tension with Western powers.
"It seems that Putin has taken a less provocative stance and therefore that's toned down a lot of nervousness and unwound some of the recent safe haven buying of assets," said Peter Cavanaugh, client advisor at Bancorp Treasury Services.
Putin made his comments after talks with the Organisation for Security and Cooperation in Europe, which said it would soon propose a "road map" to defuse the Ukraine crisis.
Still, Bancorp's Cavanaugh said deep tensions in the region were long-standing and were unlikely to be resolved easily.
