Thursday 11th August 2011
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The New Zealand dollar had another big fall overnight and recovered some ground today in a market that dealers described as skittish.
It dived on Wednesday night as global economic uncertainty persisted and worries grew about French banks with large exposure to peripheral euro zone debt. From US83.15c at 5pm yesterday, the kiwi held above the US83c level until around 1am when it plummeted and by 8am was down to US80.81c.
It recovered to be US82.14c at 5pm and traded as high as US82.63c.
Daniel Bell, senior dealer at HiFX, said the intra-day moves just reflected the skittish market.
The NZ dollar fell when the Australian dollar came under pressure from weaker than expected employment data that impled interest rates could remain lower for longer.
"Aussie employment data at 1.30pm came in worse than expected and the aussie sold off on the back of that. After losing 100 points it gained 100 points soon after," Mr Bell said.
"We are seeing more of a positive tone in local market but it continues to be very, very volatile," he said.
Many investors were "shutting up shop" and were waiting until the dust settled.
ANZ bank said that heightened concerns around Europe had seen the NZ dollar lead the way to reversing all yesterday's gains, and it had opened locally "frazzled".
European bank shares had been hammered after markets went after the French banks, because of the banks' exposure to sovereign bonds, ANZ said.
Continued currency volatility was likely throughout the remainder of the week. Downside bias should remain given the reflection in the equity markets of increasing economic risks in the near term.
It was at 0.5080 euro at 5pm from 0.5699 euro at 8am and 0.5794 at 5pm yesterday.
It was at A80.08c at 5pm from A80.54c yesterday and was at 62.97 yen from 63.91yen.
The trade weighted index was at 71.21 from 71.77.
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