The New Zealand dollar traded tightly yesterday as overseas investors retreat to safer havens or are frightened away by global economic uncertainty.
At 5pm the kiwi was trading at US41.04c, from a high of US41.20 and US41.13c at Wednesday's close. Its Australian trading mate tumbled even further, ending on US49.13c (US49.50c).
Wednesday's 50 basis point interest rate cut by the Reserve Bank failed to spark much interest from investors, and the tone was one of "poor liquidity", according to one dealer.
The only bright spot was the kiwi-aussie cross, as the Australian currency found itself shunned for not following the lead of New Zealand and other central banks in cutting interest rates. At 5pm the kiwi was buying A83.48c (A83.11c at yesterday's close).
"It's all fairly emotive," said the dealer. Australia's data was still fairly sound but since last week it and the kiwi had been left behind by euro as world investors pulled out of the US in favour of Europe.
"It's ironic the euro has gone up so far and the kiwi and aussie haven't followed it, and also ironic the aussie has fallen so far and yet the kiwi hasn't fallen as much ... so there's obviously something holding the kiwi in."
Dealers have picked the kiwi to reach A84c within a week.
Against the greenback, the kiwi was expected to sink no further than US40.94c and climb no higher than US41.30.
At 5pm it was trading at 48.23 yen (48.45), 27.99 pence (28.09), 0.8662 marks (0.8693), 0.6552 Swiss francs (0.6582) and 0.4429 euros (0.4445).
The Australian dollar was buying around $NZ1.1952 ($NZ1.2029).
The trade-weighted index was at 48.45 (48.55), 90-day bill yields were at 5.34 per cent (5.33 per cent) and the monetary conditions index was at minus 987 (minus 977).
Among the bonds, the March 2002s slid a little to 5.17 per cent (5.18), as did the April 2004s at 5.55 per cent (5.57), the November 2006s nudged up to 6.12 percent (6.10 per cent), and the November 2011s were at 6.59 per cent (6.52 per cent).
- NZPA
<i>Currency:</i> Kiwi trades tightly but outperforms Aussie
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