Kiwi holds above US75c - for now

Thursday 17th February 2011

The New Zealand dollar dropped close to the US75c level against the greenback again overnight, and efforts to move higher early today looked flimsy.

That was despite the United States dollar slumping broadly after Israel said Iranian warships were en route to Syria, with demand for non-US safe-haven currencies seen thriving should the situation worsen.

Israel's foreign minister said moves by two Iranian war ships to sail through the Suez canal to Syria were a "provocation" by Tehran.

The NZ dollar fell to around US75.05c about 3am, after dropping to similar levels briefly yesterday - a seven-week low. By 8am today the kiwi was at US75.44c.

ANZ bank said solid demand for the NZ dollar had managed to avert a test of the US75c level, although the bounce had been limited and short-lived as ratings agency Moody's Investors Service announced reviews for the Australasian banking sector.

Moody's placed the big four Australian banks on review for a possible downgrade, saying the review would focus on the Australian banking system's structural sensitivity to conditions in the wholesale funding market.

ANZ expected further downward pressure today on the NZ dollar which would be unable to lift from support levels. It remained vulnerable technically to a move into the US74c zone.

The kiwi was little changed against the Australian dollar around A75.40c at 8am, and briefly dropped to a two-month low 0.5534 euro around 6am before lifting to 0.5561 at 8am, slightly down from 0.5571 at 5pm yesterday.

The NZ dollar was little changed at 63.11 yen at 8am, with the trade weighted index also little changed at 67.42.

NZPA

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