NZ dollar weakens on risk aversion, yen also weak

Friday 25th January 2013

The New Zealand dollar is lower on Friday morning after risk aversion rose on concerns about nuclear testing by North Korea, but it rose against a weak Japanese yen.

The kiwi was at 83.80 US cents at 8am, down from 84.32 cents at 5pm on Thursday. After touching 84.40 cents yesterday it has fallen as low as 83.70 cents.

"It was a night punctuated by Japanese yen weakness and a bit of risk aversion coming out of North Korea," Alex Hill, strategist at HiFX said.

There was a big selloff in the yen after a Japanese politician said Japan was happy with the yen at current levels and spoke about it potentially weakening further.

The kiwi rose to 75.30 yen at 8am from 75.24 at 5pm on Thursday. It has been as high as 75.50 in recent trading.

"There has been a selloff in kiwi and aussie on threats of more nuclear testing in North Korea," Mr Hill said.

"It was a decent excuse for a sell-off anyway."

Comments by Reserve Bank of Australia board member Heather Ridout that the Australian economy will require active management to cope with the slowing mining boom and high Australian dollar upped the ante in the rate-cut debate in Australia.

The kiwi was at 80.08 Australian cents at 8am from 80.17 at 5pm on Thursday.

Today the focus is on the release of Japanese monetary policy minutes early this afternoon New Zealand time.

Government accounts for the six months to December are being released in New Zealand in the morning.

US unemployment claims data released last night was slightly below expectation but the focus was Asia overnight.

The kiwi was at 53.09 British pence from 53.27 pence on Thursday and at 62.69 euro from 63.32.

The trade-weighted index was at 75.47 from 75.64.

BusinessDesk.co.nz

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