NZ dollar in sharp fall

The New Zealand dollar fell rapidly against the greenback early today, dropping back to levels it was at a week ago before its climb to a 15-month high last Thursday around US76.35c.

By 8am today the kiwi was buying US74.62c, having fallen around 1c in the previous five hours as the greenback strengthened on the back of falling stock and commodity prices.

The NZ dollar eased to 0.5023 euro at 8am from 0.5031 at 5pm on Friday, and was down to 68.83 yen from 69.24.

Against the Australian dollar, the kiwi edged up to A81.65c at today's local open from A81.42c on Friday evening. The trade weighted index slipped to 67.19 at 8am from 67.50 at 5pm on Friday.

The US dollar rallied from a 14-month low against the euro as falling stock and commodity prices dampened risk appetite, prompting investors to lock in recent gains in other currencies.

Investors were also reluctant to push the euro higher given the huge amount of bearish trades on the US dollar, which suggests a near-term recovery in the US currency is on the horizon.

ANZ bank said speculation that the US Federal Reserve may signal earlier than expected interest rate hikes at its meeting next week may have played a role in the US dollar's rise and retreat in US stocks.

With rumours abounding that even the Federal Reserve may shift its stance into neutral, the focus would come on the Reserve Bank of New Zealand, which will review this country's interest rates on Thursday, ANZ said.

The Reserve Bank's announcement would have more importance than many believed.

- NZPA