NZ dollar tumbles against greenback

Photo / Dean Purcell

The New Zealand dollar has tumbled against the greenback as global stocks, oil prices and the euro fell into a tailspin.

At 8am today the kiwi was buying US80.50c, slightly up from a three-week low reached an hour earlier, after having fallen from US81.51c at 5pm yesterday.

The euro hit a 2-1/2-week low against the US dollar, heading for its worst day in more than a month as investors fretted about the lack of resolution of Greece's debt crisis and the effect a default could have on European banks.

Euro zone ministers failed to reach agreement on how private holders of Greek debt should share the costs of a new bailout. Uncertainty over a second rescue for Athens and fears of contagion pushed the bond yields of Greece, Ireland and Portugal to euro lifetime highs.

Adding to investor unease, Moody's threatened large French banks with possible downgrades. The ratings agency also said it was reviewing ratings of subsidiaries of some Portuguese banks for possible downgrades.

"The market is really caught in such a tailspin at the moment," Dean Popplewell, chief currency strategist at Oanda in Toronto.

At the same time, data continued to show a soft growth outlook for the United States, with inflation recovering, which weighed on investor appetite for riskier assets while favouring safe havens such as the US dollar.

The NZ dollar rose to 0.5681 euro at 8am from 0.5658 at 5pm, while being little changed at A76.21c against the aussie, and falling to 65.24 yen from 65.64. The trade weighted index fell to 69.91 at 8am from 70.15 at 5pm.

ANZ bank said that in an environment where headline driven event risk was high, it was impossible to tell where markets would go from here.

Global moves would dominate the NZ dollar, with New Zealand-specific events inconsequential.

- NZPA