Kiwi dollar eases, then small bounce against greenback

The New Zealand dollar eased during the first part of the overnight session before managing a small bounce early today, as risk appetite weakened amid concerns about the global economy.

By 8am the kiwi was buying US66.83c, similar to its level at 5pm yesterday, having briefly dropped to a low point around US66.45c.

BNZ Capital senior strategist Danica Hampton said concern about the strength and timing of an anticipated global recovery had seen equity markets plunge worldwide.

Escalating concern about the global backdrop had seen investors ditch growth sensitive currencies such as the NZ dollar in favour of the relative safety of the US dollar and the yen, Ms Hampton said.

Heavy NZ dollar selling had been seen from a wide variety of short term speculative players and real-money accounts during yesterday and overnight.

But it had not been all one-way traffic. Appetite for the Australian and NZ dollars had been noted from macro-driven funds at times.

The kiwi's movement against other currency was relatively muted overnight, with the NZ dollar up to 0.4747 euro at 8am from 0.4728 at 5pm, while easing to 63.12 yen from 63.26.

Against the Australian dollar the kiwi was little changed at A81.32c at the local open, while the trade weighted index was 62.64 at 8am from 62.62 at 5pm.

Among the big currencies, the euro hit a two-week low against the greenback and neared a one-month trough against the yen, as world stock markets fell and doubts about a US recovery prompted investors to cut exposure to risk.

The yen rallied across the board as investors bought it as a safe haven.

- NZPA