The New Zealand dollar fell as investors digest the details of a second bail-out package for Greece and uncertainty about Europe's future dims investor appetite for higher yields.
The New Zealand dollar fell as low as 82.62 US cents from 83.25 cents yesterday at 5pm. It traded at 82.97 cents at 8am in Wellington. The kiwi slipped to 62.62 euro cents from 62.94 cents.
The greenback and the euro have continued to strengthen against the kiwi after European Union finance ministers handed Greece a 130 billion euro lifeline to avoid bankruptcy in March. The package was secured on pledges for greater austerity and a 53.5 percent haircut for private bond investors, removing near-term uncertainty for the Mediterranean nation.
"The market is looking for further news that propels the kiwi either way," said Dan Bell, currency strategist at HIFX. "I see the kiwi heading back down into the early 80s - we haven't seen any recent news to move higher. The kiwi is looking stretched."
Fitch lowered Greece's credit grade by two levels to C from CCC. Default is "highly likely in the near term" and Fitch will cut the rating to "Restricted Default" once a bond exchange is completed.
