Currency: NZ dollar holds level against weakening greenback

After a bumpy night, the New Zealand dollar was this morning back where it left off yesterday evening against a broadly weakening greenback.

By 8am the kiwi was buying US60.85c, the same as its level at 5pm yesterday, having dropped to around US60.20c overnight.

The United States dollar plunged to its lowest level this year against a currency basket, while the euro neared a five-month high above $US1.39, as fear of widening US deficits soured investors on US dollar-denominated assets.

BNZ Capital currency strategist Danica Hampton said the sentiment for a weaker US dollar continued to dominate foreign exchange markets.

As had been seen in the past week, the foreign exchange markets were dislocating from correlation with the fortunes of equity markets.

ANZ said official rhetoric around the greenback would continue, and may even increase, but it should not disguise the fact that markets were uncomfortable holding a depreciating asset.

The NZ dollar eased against other major currencies, buying 0.4374 euros at 8am from 0.4416 at 5pm, and down to 57.36 yen from 57.50.

Against the Australian dollar, the kiwi slipped to A78.31c at the local open from A78.43c, while the trade weighted index fell to 57.97 at 8am from 58.21 at 5pm.

- NZPA