Tuesday 19th April 2011 |
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The New Zealand dollar lost the best part of a US cent today, continuing a decline following yesterday's lower than expected inflation figures and driven by risk aversion on world markets.
The kiwi touched a three-year high early yesterday, topping US80c, but by 5pm was at US78.44c. That compared with US79.10c at 8am, and US79.34c late yesterday afternoon.
The kiwi also took a slide against the Australian dollar, to A74.98c, from this morning's A75.24c and A75.11c at 5pm yesterday.
The Reserve Bank of Australia said this afternoon it faced a challenge in balancing strong investment in the mining sector with the potential for rising inflation, pointing to solid local and global growth while it decided to keep its key rate at 4.75%.
The NZ dollar was weaker against the pound, at 48.27p from 48.68p yesterday, and the yen, at 64.70 yen from yesterday's 65.70c.
Its decline was less marked against the euro, to 0.5517 from 0.5519.
The trade weighted index fell to 68.35 from 68.82.
The yen gained ground today as declines in Asian share markets prompted investors to reduce their exposure to carry trades, in which low-yielding currencies such as the yen are borrowed to buy high-yielding currencies such as the Australian and New Zealand dollars.
Such trades are generally not favoured in risk-averse markets.
The tumble in equities today and overnight was sparked by mounting fears about the future of Greece's massive debt and Standard & Poor's threat to cut the United State's blue chip AAA credit rating.
Dealers considered the market moves a healthy correction following a build-up in investments in risky assets.
NZPA
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