Demand for the New Zealand dollar was "pretty soft" today as currencies around the world continued to slide.
The kiwi closed on a day's low of US40.74c, struggling no higher than US41.18c. Overnight, dealers picked the kiwi to sink no lower then about US40.40c-50c.
Investors were trying to avoid any type of risk, BNZ's foreign exchange manager Greg Ball said.
"The theme of the week has been all capital managers and offshore fund managers getting out of what they perceive to be risky positions - and that is certainly downunder currencies - and moving into safe haven currencies, being euro, yen, swiss, stirling."
The ANZ agreed. In its weekly market report, it said the export sector was benefiting as the kiwi had lost ground against most major currencies.
It had fallen US3c since late August, indicating that overseas investors were succumbing to a natural tendency in troubled times, to repatriate their funds at home and ignore "smaller investment destinations like New Zealand".
Bonds had also been affected by this view, as longer-term NZ bond yields failed to keep pace with US or Australian counterparts.
"Not helping this situation is some evident trepidation within the bond market regarding New Zealand's fiscal outlook and prospective debt-issuance."
The bank said it would not rule out another cut in the official cash rate over the months ahead.
The Australian dollar also proved this week it was no safe haven in the current deteriorating world economy, closing at US49.07c compared to US49.38c at yesterday's close.
Economists predicted the aussie was likely to stay in the doldrums for some time to come , even though its economy was quite robust.
"The aussie is a fair weather sailor. It doesn't travel well in times of uncertainty," Jo Masters, currency strategist at Macquarie Bank said.
Other world economies were also suffering - the yen stood at new monthly data showed Japan's economic activity slowed in July , with the all-industries index easing 1.2 percent from the previous month.
On the aussie-kiwi cross, the New Zealand dollar weakened a little, buying A82.97c (A83.48 at yesterday's close). The aussie was buying $NZ1.2054 (NZ$1.1952).
At 5pm the kiwi dollar was trading at 47.71 yen (48.23), 27.86 pence (27.99), 0.8656 marks (0.8662), 0.6496 Swiss francs (0.6552) and 0.4426 euros (0.4429).
The trade-weighted index was at 48.17 (48.45), 90-day bill yields were at 5.33 per cent (5.34 per cent) and the monetary conditions index eased consideration to minus 1016 (minus 987).
Among the bonds, the March 2002s eased to 5.16 per cent (5.17), the April 2004s rose to 5.56 percent (5.55), the November 2006s rose to 6.16 percent (6.12 per cent), and the November 2011 s were up at 6.61 per cent (6.59 per cent).
- NZPA
<i>Currency:</i> Kiwi heads lower as investors seek safer havens
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