KEY POINTS:
The New Zealand dollar fell against the greenback, euro and yen today as investors' aversion to risk grew.
But the Australian dollar was hit harder than the kiwi and the cross rate rose to A86.41c from A85.86c at the same time yesterday.
The kiwi closed on US75.46c compared with US76.15c yesterday while against the euro it fell to 0.5074 from 0.5135. There was an even more pronounced fall against the yen - to 82.10 from 83.86.
The yen rose to a two-year high against the US dollar while it also gained heavily against high yielders like the kiwi as investors stayed wary of risky carry trades on worries about credit markets and the health of the US economy.
The US dollar generally weakened as expectations of a further Federal Reserve interest rate cut were reinforced by the central bank's projection that US economic growth will slow next year.
Investors are increasingly worried about widening mortgage-related losses at financial institutions and their impact on the broader US economy.
Analysts said weak stock here and in Asia after a slump on Wall Street could trigger another wave of unwinding of carry trades as investors buy back low-yielding currencies like the yen that had been sold to fund investments in higher-yielding currencies.
Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto, said risk aversion was dominating the foreign exchange market.
"Increased concerns about the credit market are not only focused on the US, but also globally. That supported the unwinding of carry trades, boosting the yen," he added.
The trade weighted index was closed on 69.42 from 69.99 at yesterday's close.
Reuters currency rates
5pm today 5pm yesterday
NZ dlr/US dlr US75.46c US76.15c
NZ dlr/Aust dlr A86.41c A85.86c
NZ dlr/euro 0.5074 0.5135
NZ dlr/yen 82.10 83.86
NZ dlr/stg 36.53p 36.85p
NZ TWI 69.42 69.99
Australian dollar US87.36c US88.71c
Euro/US dollar 1.4870 1.4830
US dollar/yen 108.84 109.65
- NZPA