The New Zealand dollar closed on its lows yesterday, clinging to its fundamental strength against a week of international volatility.
The kiwi was rebuffed around US49.20c and by 5pm had sunk to US48.80c, compared with Thursday's US49.05c. It closely followed the Australian dollar which closed at US56.54c (US56.66c at Thursday's close).
Dealers said volumes had been healthy but the trade had been fairly even two-way. The kiwi had come under pressure from profit-taking on the aussie and euro, and a contributing factor was thought to be the end of the half year for those using a December financial year.
Revelations that WorldCom, the No 2 US long distance carrier had inflated its financial results by almost $US4 billion ($NZ8 billion) had caused investors to flee to safe-haven currencies - at the expense of the kiwi, aussie and greenback, a dealer said yesterday.
"We have seen a major flight to quality which has resulted in the euro, yen and British pound moving higher, while traders have sold the New Zealand dollar and Australian dollar against all currencies," Trevor Pye of Hong Kong and Shanghai Banking Corporation said.
The kiwi moved little on news that the country's gross domestic product had grown a strong 1.1 per cent during the March quarter, bang on expectations.
One dealer suggested the kiwi would test US49c again overnight, ranging between US48.70/US49.05c.
"It does seem fairly well supported in the (US48.)70s," he said.
On the crosses at 5pm the kiwi eased against all major currencies buying A86.32c (A86.58c at Thursday's close), 58.54 yen (58.83), 31.95 pence (32.13), 0.7269 Swiss francs (0.7306) and 0.4935 euro (0.4971).
Against the kiwi, the aussie was buying $NZ1.1585 ($NZ1.1551).
On the money market 90-day bills were at 6.00 per cent (5.99), the trade-weighted index was weakened to 55.45 (55.81) and the monetary conditions index eased to minus 247 (minus 215).
On the debt market the April 2004 bonds were at 6.05 per cent (5.98), the November 2006 bonds were at 6.43 per cent (6.38), and the November 2011 bonds were at 6.65 per cent (6.57).
- NZPA
<i>Currency:</i> Kiwi closes on lows after volatile week offshore
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