Kiwi falls against greenback as commodity prices fall

Friday 6th May 2011

The New Zealand dollar fell to its lowest level against the greenback in three weeks as a slide in commodity prices hurt currencies from commodity exporters such as this country and Australia.

At 8am the kiwi was near lows at US78.25c, having fallen from US79.15c at 5pm yesterday.

Risk aversion, sparked by slower growth in the US and some developed economies, contributed to gains in the US dollar and yen, two low-yielding currencies used to fund the purchase of riskier assets.

As risk sentiment worsened, investors reduced positions in US dollar-denominated commodities such as gold, silver, and oil, which further stoked the greenback's gains.

At the same time, the euro plunged across the board, on track for its worst day against the US dollar since November, after comments from the head of the European Central Bank suggested interest rates were unlikely to rise next month.

From a six-week low around 0.529 euro last night the NZ dollar surged to be at 0.5387 at 8am, with the kiwi also reaching a one-week high against the Australia dollar, buying A74.11c at 8am near session highs from A73.76c at 5pm.

The NZ dollar was down to 62.71 yen from 63.59 at 5pm, while the trade weighted index fell to 67.33 at 8am from 67.46.

NZPA

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