NZ dollar drops to month low

Photo / Dean Purcell

The New Zealand dollar fell to its lowest level in a month against the greenback, as growing fears about the euro zone's debt crisis prompted investors to embrace safety and shun risk.

The kiwi dropped as low as US74.75c on Friday night and by 8am today had only edged back up to US75.05c, well down on the US75.95c at 5pm on Friday.

The US dollar rallied, with the euro sliding to a new two-month low against the greenback, as mounting speculation that Portugal will need to follow Ireland in seeking financial aid unsettled nervous investors.

The euro did regain some ground early today after the European Union approved an 85 billion euro ($NZ150.5 billion) rescue package for Ireland.

The Australian dollar tumbled against the greenback at the end of last week after its central bank quashed prospects of an imminent rise in interest rates and the yen hit a seven-week low against the US dollar, with fresh sabre-rattling by North Korea helping the US currency.

While the decline against the US dollar was broad-based, the NZ dollar was also falling against other currencies.

The kiwi dropped to its lowest level in more than three weeks against the Japanese currency, falling below 62.70 yen early on Saturday. By 8am today the kiwi was at 62.97 yen, down from 63.58 yen at 5pm on Friday.

The NZ dollar was little changed at A77.86c against the aussie at 8am today, while falling to 0.5645 euro from 0.5698 at 5pm on Friday. The trade weighted index fell to 68.18 from 68.72.

BNZ markets strategist Mike Jones said the NZ dollar had been the weakest performing currency last week.

It had started last week around US78.50c, but a collapse in global risk appetite sapped demand for growth-sensitive currencies such as the kiwi.

- NZPA