KEY POINTS:
The New Zealand dollar regained a little poise after a US2c plunge overnight, due to concerns about credit markets in the US and a wave of selling against the yen.
The kiwi was already under pressure after Reserve Bank Governor Alan Bollard signalled yesterday's interest rate rise might be the last in the cycle.
Today it travelled down to US77.82c compared with yesterday's US79.90c and a 25-year high on Tuesday of US81.6c.
During the day, however, it enjoyed a fairly "solid bounce" to close at US78.33c.
Dealers said the selldown was largely from investors who had borrowed in the low-interest yen to reinvest in higher-yielding, "riskier" currencies like the kiwi.
"It was just a whole carry trade unwind," Mark Elliott, a technical analyst at ANZ Investment Bank, said.
"Declining credit quality and the [US] stock market took a hit and those markets, they look to liquidate markets where they have got profits and that's in the carry trade. So all the end crosses got slammed yesterday."
He thought the kiwi dollar could top US79c again tonight.
The kiwi was also weak against other trading partners. It continued to fall against the Aussie, down to A89.71c, nearly flat against yesterday's close.
It was buying 0.5701 euro (from 0.5827 yesterday) and 93.13 yen (96.35 yen yesterday).
The trade weighted index was 74.72 from 76.24 yesterday evening.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US78.33c US79.91c
NZ dlr/Aust dlr A89.71c A90.31c
NZ dlr/euro 0.5701 0.5827
NZ dlr/yen 93.13 96.35
NZ dlr/stg 38.29p 39.95p
NZ TWI 74.72 76.24
Australian dollar US87.15c US88.46c
Euro/US dollar 1.3741 1.3713
US dollar/yen 118.98 120.58
- NZPA