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Kiwi Falls On Risk Aversion, Economic Concerns

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 12 NZPA - Risk aversion and lingering concerns about the local economy resulted in heavy selling of the New Zealand dollar today.

The kiwi dollar slipped to US76.52c at the close, close to its lowest point in three and a half months, against US77.20c on Friday.

The kiwi had seen heavy selling out of Japan after a disappointing result from the world's largest insurer AIG led stock markets downwards on Friday, BNZ currency analyst Danica Hampton said.

"We saw a whole lot of cross-yen selling, effectively carry trade unwinding, so supply of kiwi-yen, combined with lingering fears about the New Zealand economy, have really kept the pressure on the currency."

The kiwi-yen also fell from a high of 79.50 yen on Friday night to 79.09 today, briefly sliding to a six-week low of 78.50.

Data out today included two gloomy reports on New Zealand house sales in April, which confirmed March's dramatic fall in volumes, a further slowdown in price growth and slight fall in median price.

After a flurry of activity recently, focus moved away on the kiwi-aussie cross, which hit A81.66c versus A82.08c on Friday. The kiwi fell about 1.8 percent against the aussie last week.

The trade weighted index eased to 68.56 from 69.11.

Ms Hampton expected the kiwi dollar to remain heavy, with bounces limited to US76.80c.

"Initial support is seen at US76.35c but I think a deeper pullback towards US75.50c is likely over the coming sessions."

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