The New Zealand dollar closed lower against its US counterpart today as forex investors, unsettled by falling global equity markets, sold down higher-yielding currencies like the kiwi.
At 5pm in Wellington, the kiwi was at US71.21c from US71.64c at 8.30am this morning and US71.33c at 5pm on Friday. It traded in a US71.10c to US71.70c range. The aussie was trading at US76.55 (US76.61c at 5pm on Friday). Against the aussie, the kiwi was at A93.16c (A93.11c).
Westpac currency strategist Johnathan Bayley said the kiwi had initially pushed a little higher in early trade to US71.70c but then broke down in late morning to around US71.40c, falling further later in the session.
He said the main market driver today was a wider move to risk aversion as global equity markets continued to fall.
" The market is reducing its US dollar short positions and as it does so it is reducing its exposure to higher yielding currencies such as the kiwi," he said. Short positions are essentially bets a particular currency will decline in value.
"We've seen the US dollar strengthen despite the (falling US) equity market and collapsing yields and we've seen kiwi and aussie underperform as the US dollar has strengthened."
At 5pm the euro at US$1.2886 (US$1.2783), and the greenback was at 107.89 yen (108.52).
On the crosses the kiwi was buying 76.84 yen (77.39), 37.70 British pence (37.98), 0.8667 Swiss francs (0.8677), and 0.5527 euro (0.5580).
The trade-weighted index was at 70.07 (70.41), and the monetary conditions index was at plus 1028 (1051).
On the money markets, 90-day bank bill yields were at 70.04 (7.03), July 2009 bonds were at 6.02 per cent (6.07) and April 2015s were at 5.91 per cent (5.96).
- NZPA
<EM>Currency:</EM> Kiwi sold down in risk-averse market
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