KEY POINTS:
The New Zealand dollar slid a cent against the greenback today as investors again fled risky investments and sent US share prices down sharply.
The kiwi closed exactly one US cent below yesterday's US76.23c close.
ANZ bank said today despite US dollar weakness, the kiwi was sold off as some risk aversion returned.
Credit concerns were reignited as a reminder the underlying problem in global financial markets had not been resolved, ANZ said.
The biggest bank in the US, Citigroup, announced a poor result due to debt writedowns and a poor outlook.
The bank's chief financial officer Gary Crittenden said he was "not optimistic" markets for collateralised debt obligations and other fixed-income products, hammered by this summer's credit crunch, would soon recover.
Citigroup Inc and other global banks earlier said they were pooling money to prevent investment funds from having to dump assets onto the market. The news sent stocks down over 1 per cent although the local market dropped only 0.5 per cent.
The US stock market also faced headwinds from record high crude oil prices, which surged to US$86 a barrel, threatening to crimp consumer and business spending.
The kiwi also slid overnight against the currencies of other major trading partners.
It closed on A84.82c against the Australian dollar from A85.46c at 5pm yesterday. It was also down to 89.45 yen from 90.83, and 0.5368 euro from 0.5453.
The trade weighted index lost 1.3 per cent to 71.55.
Traders said US dollar weakness would continue if expectations further tilt towards the possibility that the Fed may cut rates by 25 basis points from 4.75 per cent when it holds a policy meeting at the end of the month.
"In the end, the big question is whether the Fed will lower rates again, and if so, when the cut will come," said Hideaki Inoue, forex manager at Mitsubishi UFJ Trust and Banking.
Traders showed limited reaction to a speech by Fed chairman Ben Bernanke, who said on late Monday that US financial markets were healthier after a turbulent summer, and that the Fed would support market stability as well as non-inflationary growth.
Reuters currency rates
4.30pm today 5pm yesterday
NZ dlr/US dlr US76.23c US77.23c
NZ dlr/Aust dlr A84.82c A85.46c
NZ dlr/euro 0.5368 0.5453
NZ dlr/yen 89.45 90.83
NZ dlr/stg 37.32p 37.97p
NZ TWI 71.55 72.52
Australian dollar US89.86c US90.40c
Euro/US dollar 1.4201 1.4168
US dollar/yen 117.34 117.58
- NZPA