NZ dollar dives

NZPA

Thursday 11th August 2011

The New Zealand dollar dived 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.

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.

The NZ dollar fell across the board overnight.

It was down to 0.5699 euro at 8am from 0.5794 at 5pm yesterday, and dropped to A79.32c against the Australian dollar from A80.54c.

The kiwi was also down to 62.09 yen at 8am from 63.91, while the trade weighted index dropped to 70.19 from 71.77 at 5pm.

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