The New Zealand dollar was resigned to its half-cent fall overnight, and failed to make any headway against the US dollar today.
The kiwi was sold sharply overnight against all currencies, including its Australian counterpart, and meandered in a range today of US54.65/85c.
Traders see US54.60c as an important support chart point and a breach would see the kiwi fall sharply again.
"It was relatively quiet. It was pretty much under pressure for most of the day, with interest to buy aussie/kiwi and general weakness in the euro as well weighing on the kiwi after last night's move," one dealer said.
"I think the down side's still vulnerable, with (Finance Minister Michael) Cullen highlighting the risks to lower growth in his speech today."
Dr Cullen warned that the Sars virus and other bad economic news would see growth forecasts cut in the Budget next month.
"And with coalition forces so close to Baghdad, since the market is so short US dollars at the moment, there may be a bit of prudency taking a profit in case, by some miracle, the allies get some success during the weekend."
The volumes released in such a move were likely to be large, and the aussie, kiwi and euro would suffer, he said.
In the next few months the kiwi would probably head lower from current levels, possibly to US51c, before finding its feet to rise again.
At 5pm, the kiwi was buying US54.78c compared with its US55.25c close yesterday. The aussie had a softer landing, easing slightly to US60.14c compared with its US60.18c close yesterday.
In Asian trade the greenback recouped earlier losses as investors were encouraged by US troops' advance on Baghdad, but underlying caution made trading choppy.
At 5pm in Wellington the US dollar was at 119.95 yen from 118.73 yen yesterday, while the euro was at $US1.0736 ($US1.0772).
The kiwi lost ground on all the crosses, buying A91.10c (A91.80c yesterday), 0.5103 euro (0.5129), 34.86 pence (35.24), 0.7572 Swiss francs (0.7614) and 65.69 yen (65.58).
The Australian dollar was buying $NZ1.0980 ($NZ1.0898).
On the money market, 90-day bills were unchanged at 5.81 per cent, the monetary conditions index was at plus 165 (195) and the trade-weighted index was at 60.43 (60.80).
Among the bonds, the April 2004 yields were at 5.45 per cent (5.47), the November 2006s were at 5.55 per cent (5.58) and the November 2011s were at 6.01 per cent (6.02).
- NZPA
<i>Currency:</i> Kiwi remains in doldrums
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