NZ dollar erratic as investors retreat

The New Zealand dollar tumbled against the greenback from around US71.20c to below US70.50c early in the overnight session, and while it briefly pushed back above US71.35c early today it quickly fell away again.

By 8am the NZ dollar was buying US70.85c, below the US71.22c it was at around 5pm yesterday, after an erratic night.

World stock markets and high-yielding currencies dropped overnight as investors retreated from riskier assets, worried about tepid global growth and renewed fears in Greek debt markets.

The Federal Reserve offered a subdued assessment of the US economy the day before and affirmed that short-term interest rates would remain near zero for "an extended period," which pressured US equities for a second consecutive day overnight.

Adding to the worry list, concerns over Greece were weighing in the euro zone, as the cost of protecting its government debt against default hit a record high.

BNZ strategist Mike Jones said easier US interest rates had afforded currencies such as the NZ dollar some support through the New York session.

The kiwi did gain against the Australian dollar overnight, rising to A81.78c by 8am from A81.44c at 5pm.

The NZ dollar had fallen below A81.10c around 8pm as the Australian currency rose after Australia's ruling Labour Party dumped Kevin Rudd in favour of Julia Gillard, but the aussie strength later reversed.

The NZ dollar fell to 0.5748 euro at 8am from 0.5771 at 5pm, and dropped to 63.42 yen from 63.97, while the trade weighted index was down to 68.06 at 8am from 68.32 at 5pm.

- NZPA