Japan's nuclear woes add to further slide in NZ dollar

Tuesday 12th April 2011

The New Zealand dollar eased on news that the crisis at Japan's Fukushima nuclear plant has been upgraded by authorities, as the market stepped away from investments considered risky.

Radiation leaks at the Japanese nuclear plant, which was crippled by last month's massive earthquake and tsunami, were given a more serious rating of seven out of a scale of seven, the same as the disaster at Chernobyl.

The kiwi, aussie, metal prices and global equity prices were all sent lower as risk aversion increased.

By 5pm, the kiwi was at US77.83c from US78.31c late yesterday afternoon. The currency had reached a five-month high around US78.45c against the greenback yesterday evening.

The sell-off of riskier assets began late yesterday, prompted by a 3% decline in crude oil for various reasons, including an IMF downgrade of economic growth in Japan and the United States, said IG Markets strategist Ben Potter.

The Japanese nuclear woes intensified the selling today, but there was also an element of investors taking advantage of the situation to offload unwanted positions.

The kiwi made ground against the weakening aussie, trading at A74.64c this afternoon from A74.06c late yesterday.

Against the euro, the kiwi eased a touch to 0.5405 from 0.5414 euro yesterday, while it softened to 47.78 British pence from 47.84p.

The currency also slid to 65.35 yen from 66.35 yen.

Consequently, the trade weighted index eased to 67.78 from 68.02.

NZPA

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