NZ dollar falls over Greece worries

The New Zealand dollar traded about a US cent lower than yesterday as investors sought shelter in the United States currency amid fears that aid for Greece may not prevent debt crises in other euro zone countries.

A rout of global equity markets continued in the Asian time zone where the euro tested new lows. As fear gripped financial markets commodity-linked currencies, like the NZ dollar, were inevitably under pressure.

Danica Hampton, currency strategist at BNZ, said the NZ dollar held up relatively well in the circumstances and there was demand from a range of accounts during the session.

By 5pm today the NZ dollar was buying US71.90c, little changed from US71.99c at 8am, but down from US72.96c at 5pm yesterday.

The NZ dollar pushed to a 33-month high against the European currency at 0.5553 on Tuesday night and was 0.5551 euro at 5pm from 0.5524 at the same time yesterday.

There was positive news in Australia with a 15 per cent jump in building approvals in March from February and a strong 30 per cent increase in earnings from Westpac.

But bleak sentiment and anticipation of future monetary policy settings eroded support for the Australian dollar, which was at US90.84c at 5pm from US92.46c at the same time yesterday. While the Reserve Bank of Australia lifted its cash rate 25 basis points to 4.5 per cent yesterday it failed to back up hopes for a rate rise in June.

The NZ dollar rose to A79.13c from A78.91c at 5pm yesterday.

Even with Greece set to receive 110 billion euros ($198.6b) in emergency loans from the European Union and International Monetary Fund, investors are on edge about the fiscal health of other euro zone countries, especially Spain and Portugal.

"There is no faith in what the EU and IMF have proposed for Greece," said Dean Popplewell, chief currency strategist at OANDA, a foreign exchange brokerage in Toronto.

The NZ dollar was at 68.11 yen at 5pm from 69.22 yen at the same time yesterday, while the trade weighted index fell to 67.95 at 5pm from 68.28 yesterday.

- NZPA