NZ dollar falls further

The New Zealand dollar fell further overnight, following yesterday's bail out of South Canterbury Finance (SCF) and Monday's evidence of weaker business confidence.

The rate of decline eased after midnight, but the kiwi still reached a week low near US69.60c early today.

By 8am the NZ dollar was buying US69.72c, having fallen from above US71.40c on Monday morning.

Also weighing on the market was the release early today of the Federal Reserve's minutes from its August 10 meeting.

The cautious Fed report underscored fears about a slowdown in growth in the United States, the world's largest economy.

The "minutes confirm what those in the market already knew, that the recent weakening in the US economy has become worrisome and that policymakers are grappling with a possible policy response," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

The NZ dollar was affected by South Canterbury Finance's decision yesterday to call in the receivers, resulting in the Government coughing up $1.6 billion to bail out investors.

The Government expects to claw much of that money back.

ANZ bank said support levels for the NZ dollar were all eliminated as offshore markets failed to grasp the benefits of Government intervention to the wider New Zealand economy.

"Yesterday's moves are likely to leave the NZD with a hangover for some time," ANZ said.

"Support from a better economic picture across the Tasman may assist in limiting downside throughout today, but vulnerabilities remain despite the beneficial actions taken by the NZ Government yesterday that should provide short term benefits."

On Monday afternoon the NZ dollar had also been affected by the National Bank Business Outlook's report of another sharp fall in business confidence.

The NZ dollar was buying 0.5502 euro at 8am today from 0.5550 at 5pm yesterday, and was down to 58.57 yen from 59.21, having fallen at one point to a 13-month low 58.38 yen.

Against the Australian dollar, the kiwi fell to a four-month low near A78.20c and by 8am was at A78.37c from A78.55c at 5pm. The trade weighted index fell to 65.36 at 8am from 65.80 at 5pm.

- NZPA