NZ dollar settles after tumble on double-dip remarks

The New Zealand dollar settled back into range-trading mode today after falling yesterday when Finance Minister Bill English spoke about the possibility of a double-dip recession.

By 5pm the NZ dollar was at US77.07c, down slightly from US77.27c at 8am. It had risen from US77.13c at 5pm yesterday.

The euro was firm. Reuters reported that central banks are switching currencies, buying euro with dollars bought during intervention.

The NZ dollar fell to 0.5622 euro by 5pm from 0.5629 euro at 8am and 0.5652 euro at 5pm yesterday.

The US dollar was broadly weaker after Federal Reserve Chairman Ben Bernanke said US unemployment remained too high, suggesting the Fed would push on with its US$600 billion ($816 billion) stimulus programme.

BNZ currency strategist Mike Jones said the NZ dollar was "blindsided" yesterday by the downbeat comments from Mr English.

Overnight, currency markets struggled for direction somewhat, he said.

A mild cooling in investors' risk appetite tended to dampen demand for growth sensitive currencies such as the NZ and Australian dollars.

A bout of profit taking had seen global equity markets post modest losses, while sentiment generally lost some steam after Ireland announced it would postpone capital injections into its banks, Mr Jones said.

The Australian dollar was slightly weaker today after employment data failed to change expectations that the Reserve Bank of Australia will keep rates on hold for a few months.

The NZ dollar rose to A76.42c at 5pm from A76.33c at 8am and A76.08c at 5pm yesterday.

It was at 63.63 yen from 63.56 yen. The trade weighted index was 68.46 at 5pm from 68.51 at the same time yesterday.

- NZPA