NZ dollar falls below US71c

The New Zealand dollar fell to its lowest level against the greenback in more than a week, but rebounded early today as Federal Reserve Chairman Ben Bernanke doused expectations the United States central bank will raise interest rates anytime soon.

By 8am the kiwi was buying US71.60c, having dropped to around US70.80c last night from US71.71c at 5pm yesterday.

Bernanke said that while the US economy had improved, the recovery remained fragile and the unemployment rate could remain high for some time. In remarks before the Economic Club of Washington, he added that he still saw an "extended period" of low rates.

Upbeat US jobs data last Friday had fueled speculation the Federal Reserve may consider winding down its stimulus measures and start shifting to a tightening bias soon.

The kiwi edged lower against the Australian dollar, to A78.19c at the local open from A78.34c at 5pm, and fell to 63.97 yen from 64.40. The NZ dollar was little changed at 0.4820 euro at the local open, while the trade weighted index slipped to 64.09 at 8am from 64.22 at 5pm.

BNZ Capital senior strategist Danica Hampton said the first half of the overnight session had been all about US dollar strength.

Against a generally stronger greenback, most currencies were sent reeling, with the NZ dollar no exception. But after Bernanke's comments the US dollar reversed its earlier strength.

"Squint your eyes through last night's volatility and NZD/USD is just a smidge lower than where it started the week," Ms Hampton said.

- NZPA