KEY POINTS:
The New Zealand dollar remained steady overnight after recovering from a two-year low yesterday.
The NZ dollar was buying US63.15c at 8am today, from US63.25c at 5pm last night.
The Reserve Bank of Australia's surprise 100-basis point cash rate cut to 6 per cent, its largest since May 1992, sparked an initial fall then recovery in the Australian and New Zealand dollars yesterday afternoon.
The NZ dollar was down to a two-year low of US62.03c at 8am yesterday.
Bank of New Zealand currency strategist Danica Hampton said the NZ dollar spent most of the last 24 hours within the US62.00c-US64.00c range.
"After the carnage seen on Monday, where the melt-down in the financial sector and global growth fears saw NZ dollar plunge from above US66.00c to US61.70c, its lowest level since August 2006, some consolidation in the NZ dollar was expected."
She said yesterday's RBA interest rate cut, increased risks to global growth, escalating cost of funding and yesterday's "relatively soft" NZIER quarterly survey of business opinion meant the Official Cash Rate was headed for 5.5 per cent.
"Overnight, government and regulatory bodies around the world stepped up efforts to shore-up confidence in the banking sector. The Fed created a special fund to buy commercial paper, the BBC reports the UK government is poised to announce a comprehensive bank rescue plan and EU finance ministers are still trying to work something out.
"However, market participants are worried the efforts won't be sufficient to stave off a global recession."
Against the aussie, the kiwi continued to rise and was at A88.14c at 8am from A87.57c.
The kiwi fell against the Japanese yen to 64.25 from 65.04 and the euro to 0.4630 from 0.4656 but remained steady against the British sterling at 36.02p.
- NZPA
