The New Zealand dollar took another beating overnight, but then staged a very slight recovery during daytime trading today.
It closed the local session at US65.01c, having opened at US64.80c -- around half a US cent below its US65.35c close yesterday.
It hit a low of US64.73c, a level not seen since since September 2004.
On other crosses, the kiwi mostly held its own despite a foot and mouth scare in the market, reported by a Singapore commentator as "hand, foot mouth disease".
The rumours arose from a mystery illness killing piglets on central Canterbury farms. Ministry of Agriculture officials indicated the disease was probably post-weaning multi-systemic wasting syndrome (PMWS), which has been in the North Island for some years.
Dealers said there had been reasonable kiwi buying out of Asia through the session, although in general the market was heavily biased towards selling the currency.
The market universally expects Reserve Bank Governor Alan Bollard to leave interest rates unchanged at 7.25 percent at tomorrow's quarterly review of monetary conditions. The market's interest will be in Dr Bollard's language and how vigilant his stance is against inflation.
The US dollar held firm after rallying for two days as Federal Reserve officials signalled that the central bank will keep lifting US short-term rates to prevent inflation from flaring.
The greenback surged nearly 1 percent yesterday after St Louis Fed President William Poole warned that consistently strong economic data would likely prompt the central bank to raise rates further.
Markets now see the Fed lifting rates to 5 percent or 5.25 percent from the current 4.5 percent.
"The dollar is repricing as US rate markets ratchet up expectations for fed funds," said Richard Yetsenga, Asian currency strategist at HSBC in Hong Kong. He said the US dollar would do well, especially against currencies that have relied on yield, such as the New Zealand dollar.
The kiwi cross rate against the Australian dollar actually firmed to A88.62c from A88.33c yesterday after the aussie fell more heavily against the greenback than the kiwi. It ended at US73.40c from US73.98c yesterday.
Rates
5pm today 5pm Tuesday
NZ dlr US65.01c US66.35c
NZ dlr/Aust dlr A88.62c A88.33c
NZ dlr/euro 0.5465 0.5457
NZ dlr/yen 76.44 76.72
NZ dlr/stg 37.42p 37.37p
NZ TWI 67.18 67.23
Australian dollar US73.40 US73.98c
Euro/US dollar US1.1901 US1.2001
US dollar/yen 117.49 117.42
<EM>Currency:</EM> Dollar steadies after another sharp overnight slide
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