NZ dollar claws back some lost ground

The New Zealand dollar regained some lost ground today against most currencies after an overnight slide, when spooked investors moved to the safe haven currencies of the United States dollar and Japanese yen.

BNZ market strategist Mike Jones said the kiwi started the domestic trading session around its day's low of US66.60c as the US stock market had a very weak close, but moved to a high of US67.50c late this afternoon.

"We are seeing ongoing signs of a drying up of liquidity in currency markets and that is leading to more volatility than normal. We have all the concerns about the European sovereign debt crisis as well, so markets are very nervous," he told NZPA.

Sharp falls in the kiwi resulted in some bargain hunting and exporters hedging today, Mr Jones said.

The kiwi was worth US67.58c at 5pm, compared with US66.81c at 8am, but lower than its US68.28c level at 5pm Thursday.

After being at a 10-month low against the yen overnight, the kiwi pushed higher today to finish the local trading session at 60.89 yen - from 59.90 at 8am and 62.60 at 5pm Thursday.

Mr Jones said the only currency the New Zealand dollar did not appreciate against today was the Australian dollar, which rose on unsubstantiated rumours that the Reserve Bank of Australia had entered the market buying aussie.

The kiwi closed locally at A81.24c, down from A81.31c at 8am but firmer than A81.21c at 5pm Thursday.

The trade weighted index dropped to 65.25 at 5pm from 66.41 on Thursday.

- NZPA