The New Zealand dollar staged a recovery against the greenback through much of the night after falling to a three-month low around lunchtime yesterday.
From around US77.25c, the kiwi climbed through yesterday afternoon and overnight to US78.50c by about 7am today, then fell away sharply in the next
hour to be at US78.15c by 8am.
The late fall came hard on the heels of an announcement by the Federal Reserve of a quarter percentage point US interest rate cut.
The Fed action, after a two-day meeting, pushed the federal funds rate down to 2 per cent, the lowest level since late 2004. It marked the seventh rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of US recession.
The move was in line with expectations, and some private economists said they believed a statement from the Fed was signalling that the central bank may be through cutting rates unless the economy weakens much more than now expected.
But with currency traders also concluding the statement did leave the door open for further rate cuts, the greenback surrendered earlier gains against the euro and yen.
While overnight the NZ dollar had regained some of its lost ground against the greenback, a small overnight bounce against the Australian dollar proved to be unsustainable.
By today's local open the kiwi was buying A82.81c, near its lowest level in six months, from A83.10c at 5pm yesterday.
In its morning brief, the ANZ bank said the NZ dollar was finding a firmer footing against the aussie at lower levels and ahead of support around A82.75c, but the cross still looked vulnerable.
Against the euro the NZ dollar was buying 0.5006 at today's local open from 0.4981 at 5pm yesterday. The kiwi was also at 81.27 yen from 80.70 at yesterday's local close, while the trade weighted index at 8am was 69.67 from 69.34.
- NZPA
