Investors' aversion to risk is beginning to seriously bite the antipodean currencies, as the Australian dollar nears record lows and the kiwi paddles under 40USc.
In the face of a feared world recession, a flight to safe currencies such as the Swiss franc and the yen has been exacerbated domestically by the ever-declining outlook of Air New Zealand.
There has been fresh speculation that Air NZ might be put into statutory management this week, pushing the unrestricted B shares to as low as 14c and the resident only A shares to 16c before recovering slightly at the close.
At 5pm the kiwi was at 39.98USc from 40.45c at 9am, and the aussie at 48.74USc from 49.07c on Friday.
"The aussie is pressuring its all time low of around 47.75USc," one local dealer said.
The kiwi's lowest daily point was 38.95USc last October.
"Both the currencies look under pressure," the dealer said.
"The aussie staged a rally late in the day which propped up the kiwi somewhat. There's general selling around in the kiwi - we're suffering from the news as people look to be risk-averse in the current economic and international conditions.
"I think at this stage the selling seems to be somewhat overdone in the kiwi and the aussie, and you'd look for a move to the top side.
We really need a good move to the top side to break the recent down trend," he said.
The kiwi made some of its moves in thin trading despite the reasonable volumes.
"It can move 20 points in low volumes, but once some large sellers come into the market, there's a panic scenario kicks in and everyone gets on the band wagon."
The kiwi lost ground against all currencies, and at 5pm was trading at 82.03Ac, 46.55 yen, 27.46 pence, 0.8559 marks, 0.6331 Swiss francs and 0.4376 euros.
The trade-weighted index was at 47.37 (48.17), 90-day bill yields were at 5.34 per cent (5.33 per cent) and the monetary conditions index at minus 1098 (minus 1016).
- NZPA
<i>Currency:</i> Flight to safety squeezes kiwi
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