Kiwi dollar eases

The New Zealand dollar fell today as weak equity markets again had investors favouring US dollars.

But it found support at lower levels and recovered to end little changed.

It was trading at US71.89c at 5pm, off the US71.06c session low, and compared to US71.95c at 5pm yesterday.

The NZ dollar had company because sterling, Canadian dollar, Australian dollar and other currencies were weaker.

Dealers said sterling was particularly hard hit and that allowed the NZ dollar to rise to 44.92p, its highest for 13 years.

Sterling fell after Bank of England Governor Mervyn King told a regional British newspaper a weak pound was helping British exporters and the economy cope with a sharp downturn.

The US dollar rallied today on short-covering and as central banks scale back liquidity injection programmes.

Dealers asked if the currency markets might be at a turning point but the answer remains elusive.

A decline in hard commodity prices further weighed on growth sensitive currencies, like the NZ dollar.

BNZ Capital strategist Mike Jones said fears about the global outlook and waning risk appetite had weighed on the NZ dollar.

Much weaker than expected US home sales spurred fears about the outlook for the US economy, Mr Jones said.

By 5pm the NZ dollar was at 0.4897 euro, from 0.4888 euro at 5pm yesterday, and was 65.23 yen from 65.33 yen yesterday.

Against the Australian dollar it was A82.76c after briefly squeezing to an eight-month high at A83.17c on Thursday night.

The trade weighted index was 65.61 from 65.46 yesterday.

- NZPA