KEY POINTS:
The New Zealand dollar spent the day retreating from its one-week high
reached overnight on Monday, weakening as overseas investors changed
their positions back in favour of the US dollar.
By 5pm, the kiwi was at US54.16c, up from US53.24c on Monday but below its overnight high of US54.70c.
Against the Australian dollar, the kiwi was at A82.27c from A81.65c on
Monday.
The currency was also stronger against the euro, yen and sterling.
The kiwi had benefited on Monday from the US dollar's decline, as risk
appetite was whetted by a strong rally in world stock markets. Hopes of an imminent bailout deal for the three United States carmakers had boosted confidence, and share prices.
However, yesterday the US dollar regained ground against the euro as investors unwound their positions.
"The [US] dollar's dip yesterday [Monday] seems to have been largely driven by position adjusting, and it is premature to say that the
trend in the currency market has changed," Yousuke Hosokawa,
treasury department senior manager at Chuo Mitsui Trust and Banking
Company, said.
Investors appeared to have a low tolerance for risk.
The New Zealand dollar remains a high-yielding currency despite recent
central bank interest rate cuts, but with the Australian dollar is
considered a riskier bet than larger currencies such as the yen.
- NZPA
