NZ Dollar: Kiwi plunges against greenback overnight

The New Zealand dollar plunged against a resurgent greenback overnight as investors took profits in higher-yielding but riskier currencies.

After reaching its highest level against the US dollar in almost eight months early yesterday, around US65.95c, the kiwi first started easing lower, getting to US65.47c at 5pm yesterday.

The pace of decline picked up, with the NZ dollar troughing around US62.75c about 6.30am today before recovering a little to US63.35c by 8am.

The sharp gains by the US dollar came as weaker-than-expected US economic data and steep losses in stocks reminded investors that the road to recovery may not be as smooth as many initially thought.

That rekindled demand for the greenback as a safe haven, with comments from Asian officials that Asia would keep buying US Treasuries even if the US credit rating were to be cut.

Between yesterday's local close and today's local open, the kiwi slipped only slightly against its Australian counterpart to A79.23c by 8am.

But earlier yesterday afternoon, the NZ dollar had fallen quickly against the aussie, after having been around A80c at yesterday's local open.

The catalyst for yesterday's fall was data showing Australia's economy expanded by a stronger than expected 0.4 per cent in the March quarter, meaning the country avoided the technical definition of recession.

The NZ dollar fell against the European and Japanese currencies to 0.4477 euro at 8am from 0.4572 at 5pm, and to 60.83 yen from 62.56. The trade weighted index was 59.78 at 8am from 61.07 at 5pm.

- NZPA