Dollar claws back some lost ground

File photo / Dean Purcell

The New Zealand dollar exchange rate against the greenback bounced along in a narrow range after slipping overnight yesterday.

From US78.44c against the greenback at 5pm yesterday, the kiwi slumped to a five-week low near US77.50c before regaining some lost ground to be at US78.17c at 8am yesterday and finished the day little changed: US78.18c at 5pm.

The overnight drop - against a backdrop of declining global commodity prices and a tick up in global risk aversion, according to BNZ strategist Kymberly Martin - followed a consistent decline since last Friday.

The NZ dollar also tumbled from 0.5564 euro at 5pm on Monday - reaching a one-week low around 0.5490 euro during the overnight session - but clawed back a little ground to be 0.5517 euro at 5pm yesterday.

The euro jumped from seven-week lows against the US dollar as a European Union meeting showed support for debt-burdened countries, lifting demand for the single-currency after last week's sharp sell-off.

The Australian dollar held up despite the weak commodities backdrop, but currency strategist Ben Potter noted speculation that the Aussie exchange rate against the US dollar was vulnerable to further downside pressure given its high correlation to risk appetite and commodities.

There are also growing concerns as to the health of the domestic economy.

The aussie was at US$1.0593 at 5pm, compared with US$1.0551 at the same time on Monday.

The NZ dollar fell to A73.80c at 5pm against the aussie, from A74.32c at the same time on Monday, and was at 63.43 from 63.44 at the same time on Monday.

The trade-weighted index dropped to 67.85 from 68.23.

- NZPA