Currency: Kiwi falls to seven-month low vs aussie

The New Zealand dollar slid to a seven-month low against its Australian counterpart after the Reserve Bank of Australia left its key cash rate at 3.25 per cent yesterday afternoon.

Early today the kiwi fell to the A77.10c region, close to the level reached in late July, which was the lowest level since the end of 2000.

By 8am the NZ dollar had managed a partial recovery to A77.52c, just slightly below its level at 5pm yesterday.

ANZ bank today said the Australian interest rate decision had generally provided support for the NZ dollar, but North American sellers had ensured the kiwi easily backed off overnight highs.

ANZ also noted what it called "finally, some positive news on the local front", with Fonterra's overnight on-line auction recording a 16.6 per cent average increase in price for all products in US dollar terms from last month.

"To be sure, we are still a long way off the peaks. But last night's auction could be an early indication that perhaps the bottom of dairy prices has been found."

Against the greenback, the NZ dollar held above six-year lows around US49.10c hit this week, moving in a range between about US49.40c and US50.15c overnight. By 8am the kiwi was at US49.59c.

The NZ dollar was also buying 0.3945 euro at the local open from 0.3934 at 5pm, and was at 48.76 yen from 48.45. The trade weighted index was 51.32 at 8am from 51.29 at 5pm.

The US dollar rose against the yen and euro as Federal Reserve chairman Ben Bernanke called for bold government action to pull the economy out of recession, even if it means a surge in federal debt.

A report showing pending US home sales falling to the lowest level since the data series began in 2001 also dulled risk appetite, causing US shares to surrender earlier gains and prompting safe-haven flows into the greenback.

- NZPA