NZ dollar tumbles overnight

The New Zealand dollar tumbled against major currencies as world sharemarkets fell sharply and soft economic data from across the globe cast doubts over the strength of economic recovery.

The kiwi fell to a two-week low against the greenback a little above US69c and by 8am was at US69.28c, down from US70.30c at 5pm yesterday.

Against the Japanese currency, the NZ dollar dropped to a three-week low, just under 61 yen from 62.42 yen at yesterday's local close. By 8am it was at 61.38 yen.

"Equity markets are down heavily today and that is being translated into some US dollar strength. All the risky currencies like the Canadian dollar, the aussie and kiwi have seen notably sell-offs versus the US dollar," Gareth Sylvester, senior currency strategist at HiFX in San Francisco, said.

"The market is extremely sensitive to the fundamental data that we're seeing right now. Any data that would suggest a slowdown could be more prolonged, or the lack of evidence to support the recovery sequence, is going to create some nervousness."

Uncertainty about the global recovery grew after data showed a steep fall in US consumer confidence, a sharp downward revision to China's leading indicators index and weakness in Japanese exports and unemployment.

The NZ dollar even fell against the euro which hit an all-time low versus the Swiss franc and an 8-1/2-year trough against the yen. Interbank euro funding costs rose to an eight-month high on fears the expiry of nearly half a trillion euros of emergency loans this week may cause strains for some banks.

By 8am today the kiwi was down to 0.5682 euro from 0.5731 euro at 5pm yesterday, but it did rise against the Australian dollar, lifting to A81.58c at the local open from A81.17c. The trade weighted index fell to 66.88 at 8am from 67.50 at 5pm.

- NZPA