KEY POINTS:
The New Zealand dollar dropped to a 10-month low against the greenback today, after Reserve Bank Governor Alan Bollard indicated there was plenty of room for further interest rate cuts.
By 5pm the kiwi was buying US73.45c, having fallen around a third of a cent against the US dollar after Dr Bollard's comments were released an hour earlier, and after having been around US74c at 8am.
The governor's words had similar effects on other currencies, with the kiwi down to A77.44c against the Australian dollar from A77.68c at the local open.
The NZ dollar was also down to 0.4709 euro at the local close from 0.4747, while against the yen it was down to 79.28 from 80.01 at the local open. The trade weighted index dropped to 65.85 from 66.29.
The kiwi weakness came against the backdrop of a rising US dollar, which held steady near a one-month high against a basket of currencies after jumping on a sharp drop in oil prices and an unexpected rise in US consumer confidence.
Market players were selling the NZ and Australian dollars on views that the impact of the economic slump and the credit crisis was spreading.
"Worries about the economic and financial sector outlook in Australia and New Zealand are hitting those currencies although it may be only reflecting broad (US) dollar buying," said a trader at a Japanese trust bank.
The aussie fell as low as US94.75c, a six-week low, hurt by the slide in commodity prices and after Australia's top banks disclosed increased losses from exposure to distressed credit markets.
Reuters currency rates:
NZ dlr/US dlr US73.45c US74.51c
NZ dlr/Aust dlr A77.44c A77.76c
NZ dlr/euro 0.4709 0.4731
NZ dlr/yen 79.28 79.98
NZ dlr/stg 37.08p 37.38p
NZ TWI 65.85 66.39
Australian dollar US94.85c US95.82c
Euro/US dollar 1.5593 1.5748
US dollar/yen 107.97 107.35
- NZPA
