KEY POINTS:
The New Zealand dollar remained at one-month lows against the Japanese yen, as weakness and insecurity in equities markets spurred investors to reduce their exposure to "carry trade" positions in high-yielding currencies such as the NZ dollar.
The NZ dollar cross against the yen was 84.03 at 5pm, compared with 84.47 at the same time yesterday. Against the US dollar, the yen was at 109.35, compared with 109.62 at 5pm on Thursday.
Some investors borrow in yen - "cheap" because Japanese interest rates are low - and invest in NZ or Australian dollar-denominated investments with relatively high interest rates.
Uncertainty over such strategies was enhanced by a 5 per cent slump in the Nikkei share average on the first trading day for 2008, crude oil prices hitting a new record high above US$100 ($131) a barrel, and continuing concerns over the health of the US economy.
Expectations of further interest rate cuts by the Federal Reserve later this month kept the US dollar under pressure and minimised the kiwi's losses against the US dollar.
The NZ dollar was down to US76.99c at 5pm - despite a high of US77.88c in overnight volatility - compared with US77.52c on Thursday. The trade-weighted index (TWI) was 71.22 compared with 71.69 at the same time yesterday.
Dealers said the kiwi was trading in a narrow range in advance of non-farm payrolls data to be released overnight in the USA, where a drop in the numbers of new jobs created in December, compared with November may stir expectations of further US interest rates cuts again this month.
Such cuts would widen the already large margin between New Zealand and US interest rates, which has been helping underpin the kiwi by attracting investors to the higher-yielding currency.
But greater-than-expected weakness in the US economy would hurt economic growth in both New Zealand, and the rest of the world.
Against the Australian dollar, the kiwi was at A87.53c from A87.85c at 5pm yesterday, and against sterling was at 39.06p compared with 39.12p.
Currency rates:
NZ dlr/US dlr US76.99 US77.52c
NZ dlr/Aust dlr A87.63c A87.85c
NZ dlr/euro 0.5223 0.5270
NZ dlr/yen 84.07 84.93
NZ dlr/stg 39.06p 39.12p
NZ TWI 71.22 71.69
Australian dollar US87.88c US88.25c
Euro/US dollar 1.4741 1.4709
US dollar/yen 109.13 10.62
- NZPA
