Kiwi keeps falling

Thursday 24th February 2011

The New Zealand dollar fell to two-month lows against the US and Australian dollars as markets assess the implications of Tuesday's deadly Christchurch earthquake.

Some economists are calling for the Reserve Bank to cut the official cash rate in the wake of the disaster.

The kiwi fell from US74.86c at 5pm yesterday to a low around US74.25c about 7.30am against a broadly weaker greenback, which appears to have lost its safe haven lustre as turmoil in Libya and soaring oil prices drove investors to seek safety.

Stocks markets fell worldwide as investors fled riskier investments and sought safety in gold, US Treasuries, the Swiss franc and the yen, with the euro also rising against the shunned US currency.

The NZ dollar dropped from A74.67c at 5pm to below A74.30c against the aussie around 9.30pm, and was only marginally stronger by 8am.

ANZ bank said that with the economy having taken a hit from the Christchurch earthquake, the only thing helping to hold the NZ dollar up were record commodity prices.

Early today the kiwi remained precariously poised near key support levels, ANZ said.

"With little by way of positive news, the NZD looks destined to move to lower levels. Sellers should maintain their upper hand throughout today's trading with a lack of local data helping their cause."

The NZ dollar also fell to four-month lows against the European and Japanese currencies, dropping from 0.5465 euro at 5pm to a low around 0.5405 early today, and from 61.80 yen to a low point of 61.23. The trade weighted index was down to 66.14 at 8am from 66.57 at 5pm.

NZPA

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