KEY POINTS:
The New Zealand dollar bounced around overnight in a narrow range against the greenback between about US78.75c and US79.15c.
By 8am today the NZ dollar was buying US78.99c from US78.91c at 5pm yesterday.
While lacking any clear direction against the US currency, the kiwi was headed down against the yen, which climbed broadly overnight as investors grew more risk averse.
At today's local open the kiwi was at 84.32 yen from 84.62 at the local close yesterday evening.
Market unease helped the Japanese currency rise against the US dollar and euro as traders unwound risky trades financed with cheaply borrowed yen.
The Australian dollar also performed well after Australia's central bank warned it would likely need to raise interest rates again to counter inflation.
The Reserve Bank of Australia hiked rates to an 11-year peak of 7 per cent last week, and markets now expect another hike in March.
But strategists said it may be tough for the aussie dollar to hold its gains in the current risk-averse environment.
The NZ dollar lost around half a cent against its trans-Tasman counterpart during trading yesterday and eased a little further overnight, from A87.49c at 5pm to A87.23c at 8am.
Against the euro, the kiwi lifted slightly from 0.5429 to 0.5440, while the trade weighted index was 72.72 at 8am from 72.74.
Bank of New Zealand currency strategist Danica Hampton said worries about the health of the New Zealand economy, including housing market weakness and drought, were starting to take the shine off the NZ dollar.
Those concerns starkly contrasted with sentiment towards Australia and selling of the NZ dollar against the aussie was helping to cap gains for the kiwi against the greenback.
- NZPA
