NZ dollar tumbles on Euro woes

Photo / Dean Purcell

The New Zealand dollar continued its downward slide against most major currencies overnight as worries over the euro spooked investors back to the safe haven currencies of the US dollar and Japanese yen.

There was a flight from currencies that benefit from increased risk appetite such as the Australian, Canadian, and New Zealand dollars, and the kiwi gave up minor gains it made in the wake of yesterday's budget.

At 8am today it was worth US66.81c, down from US68.28c at 5pm yesterday. It also slid to 0.5340 euro from 0.5529, dropped to 46.41 pence from 47.47p and against the yen fell to 59.90 from 62.60.

The trade weighted index dropped to 64.81 from 66.41 yesterday.

It was only against the Australian dollar that the kiwi made any ground. It rose to a new level above A81c, from around A80c it was trading at yesterday and at 8am it was worth A81.31.

The budget's drop of company tax to 28 per cent in advance of that in Australia provided a small point of difference. It was enough to worry those with short NZ dollar/long Australian dollar positions and the subsequent further reversal drove the cross rate higher, said ANZ senior markets economist Khoon Goh, in the bank's morning brief.

The New Zealand dollar was blown around by the moves of the Australian dollar, he said.

"Many will look for some stability to close this week. The moves of the New Zealand dollar are in the hands of the Australian as it tumbles through support levels like they do not exist."

In overseas exchanges the euro rose 0.5 per cent at US$1.2490, touching session peaks at US$1.2511 on EBS trading platform and intra-day lows at US$1.2296.

The Australian dollar came under further heavy selling pressure versus the US dollar and the yen in particular.

The aussie traded down around 2.7 per cent versus the US dollar at US82.48c after falling to a ninth-month low at US81.53c.

- NZPA