The New Zealand dollar drifted on a sea of uncertainty yesterday as nervous sentiment about international stability frightened buyers away.
Dealer Tim Robinson of Deutsche Bank said people were not so interested in the New Zealand dollar because they had more global worries.
"It's big macho concerns. It's not about whether the currency goes up or down 10 points. It's 'Is your office going to be bombed?' 'Is your fund going to be destroyed?' 'Are your actual physical investments going to be blown up?"'
Observers noted that this trend might continue for up to three months, leaving the kiwi dollar steady but rudderless unless there were further terrorist attacks.
At 5pm, the kiwi was at US41.24c mirroring its opening price and down on its close yesterday of US41.57c. It traded between US40.13-30c and looked like it would rise overnight on the back of an easing greenback, with a high of US41.30c and support around US40.75-85c.
Its Australian counterpart also traded within a tight range, opening on US50.05c and closing at US50.11c (US50.73 at yesterday's close).
Dealers said a run on the US dollar on Tuesday night saw it reverse gains made by the dollar bloc currencies like the euro, yen and stirling in recent days.
"I think the NZ dollar against the US at 41c is slightly on the cheaper side, but given the current account deficit and that we basically (depend) on foreigners for our capital, we're going to have to stay at the cheaper end of the scale to stay fair-ish," Mr Robinson said.
The kiwi loss ground against the Australian dollar during the day, closing at A82.18c (A81.96c at Tuesday's close).
The Australian dollar was buying $NZ1.2168 compared with $NZ1.2202 late Tuesday.
On the other crosses, the kiwi was trading at 49.70 yen (49.87), 28.26 pence (28.23), 0.8826 marks (0.8832), 0.6696 Swiss francs (0.6679) and 0.4514 euros (0.4516).
The trade-weighted index was at 48.92 (49.05), while the 90-day bill yields were at 5.28 per cent (5.26). The monetary conditions index eased to minus 946 (minus 932).
Among the bonds, the March 2002s were at 5.09 per cent (5.08), the April 2004s were at 5.35 per cent (5.32), the November 2006s were at 5.98 per cent (5.92), and the November 2011s were at 6.46 per cent (6.38).
- NZPA
<i>Currency:</i> Kiwi drifts as world markets watch and wait
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