KEY POINTS:
The New Zealand dollar has slunk back to a near six-week low against the yen as high-yielding currencies are sold off on fears of a US recession.
By 5pm today the kiwi was buying 83.11 yen, falling from 84.07 yen on Friday and to similar levels as Saturday morning, when a very weak US payrolls report fuelled concerns about global growth.
Against the greenback, it settled near opening levels at US76.30c, but down from US76.99c at Friday's local close.
The weakness began on Friday night when US manufacturing and housing sector data came in very soft. Then on Saturday a December report showed the weakest jobs growth since August 2003, and the US jobless rate rose to 5 per cent, the highest since November 2005.
BNZ currency analyst Danica Hampton said today the kiwi squeezed up to US76.85c at one point as people returned to work, but came under pressure when Asian equity markets opened weaker.
"I think that the market over the last two weeks have expressed their worries as a sell-US dollar mentality and I think that's going to change in the next week or two."
Looking forward she felt the bad news of the US economy was already priced in and the Federal Reserve would chop interest rates by 25 basis points at the end of the month.
"But if we're wrong and the US economy's actually much worse than that... if it does head into recession, we're likely to see quite a slowdown in global growth as well, and that doesn't bode well for commodity exporting currencies like the kiwi."
The Australian dollar was also dumped, to US87.17c from US87.88c on Friday as carry traders sought "safer" havens like low-yielding yen.
The kiwi fell against the Australian dollar to A87.54c at 5pm (A87.63c on Friday), and to 0.5183 euro (0.5223 euro). The trade weighted index slipped to 70.68 from 71.22.
Offshore, the US dollar edged up on the yen and euro . Analysts are divided about whether the greenback will extend last year's sell-off to record lows against the euro in 2008 as the economy worsens, or whether the Fed's sharp rate cuts will help improve confidence on the US economy's outlook.
Reuters currency rates:
5pm today 5pm Friday
NZ dlr/US dlr US76.30 US76.99c
NZ dlr/Aust dlr A87.54c A87.63c
NZ dlr/euro 0.5183 0.5223
NZ dlr/yen 83.11 84.07
NZ dlr/stg 38.73p 39.06p
NZ TWI 70.68 71.22
Australian dollar US87.17c US87.88c
Euro/US dollar 1.4720 1.4741
US dollar/yen 108.92 109.13
- NZPA