Currency: Dollar rebounds after sharp decline

The New Zealand dollar recovered from one-month lows after its hefty slide overnight, but further falls are on the cards if US stocks continue to decline.

Large losses on Wall Street spilling over to world markets helped boost the US dollar's appeal as a safe bet, and hurt currencies such as the kiwi considered more risky.

Some stability returned during the day, helping the New Zealand and Australian dollars recover, said Westpac senior market strategist Imre Speizer.

By 5pm, the kiwi was at US55.67c, well down on US56.76c late yesterday afternoon but above its levels earlier this morning near US55c.

The NZ dollar has fallen from around US59.30c in the past week.

"This is only one big down day after many, many up days," Mr Speizer said.

"If we get two in a row, it kind of confirms a turning point, so it would give people a lot more confidence that this rally we've had for all of March was a fairly temporary thing and we're basically going to turn around and go back to the doldrums."

Against the aussie, the kiwi rose to A79.24c from A78.85c at 5pm yesterday, but it dipped against euro, yen and sterling.

"The aussie and kiwi were punished a lot as risk aversion fell, and as risk aversion has itself stalled, those two have bounced back a bit more than the others," Mr Speizer said.

Reserve Bank of Australia comments that Australia was in recession and inflation was declining had little impact on the cross-rate as commentators had expected more information, and were no clearer about what to forecast for bank's the next rate-setting meeting, he said.

Renewed concerns about the US banking sector, tempering risk appetite, triggered buying in the yen which hit a brief one-month high against the euro today.

Currency rates:

5pm today 5pm yesterday

NZ dlr/US dlr US55.67c US56.76c

NZ dlr/Aust dlr A79.24c A78.85c

NZ dlr/euro 0.4300 0.4360

NZ dlr/yen 54.72 56.17

NZ dlr/stg 38.22p 38.50p

NZ TWI 55.91 56.67

Aust dlr/US dlr 70.26c 71.98c

Euro/US dlr 1.2945 1.3016

US dlr/yen 98.30 98.96

- NZPA