KEY POINTS:
The New Zealand dollar plunged to two-week lows against major currencies, as risk aversion rises and equities weaken.
During the early morning hours, the kiwi plunged from above US57.80c to around US55.50c, its lowest level in two weeks, before regaining some lost ground. By 8am the NZ dollar was at US56.16c from US57.47c at 5pm yesterday.
The US dollar itself fell sharply against the yen, as United States stocks extended losses after US Treasury Secretary Henry Paulson said he was backing away from buying troubled mortgage assets using the government's US$700 billion ($1.23 trillion) bailout fund.
His comments compounded worries about the global economy, which is facing tough times as a result of the worst financial crisis in decades. The US dollar and the yen have performed strongly in the recent environment of extreme risk aversion.
The NZ dollar tumbled to a two-week low against the Japanese currency around 52.50 yen early today, before recovering a little to be at 53.62 yen by 8am from 56.10 yen at 5pm.
Similarly, the kiwi touched its lowest level in a fortnight against the euro around 0.4440. By the local open the rate was 0.4478 from 0.4580 at 5pm.
ANZ bank said demand had initially delivered a move higher for the NZ dollar. Most of the volatile move came in the pre-lunch session in the US, as a scramble to buy the US dollar across the board drove Australasians lower.
The NZ dollar firmed against its trans-Tasman counterpart, to A87.65c at 8am from A87.30c at 5pm. The trade weighted index was 57.51 at 8am from 58.61.
- NZPA
