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NZ Dollar At Two-Year Low Against US Dollar

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Oct 7 NZPA - The New Zealand dollar took a dive against the US dollar overnight falling to a two-year low, as the global financial crisis deepened.

The strong US dollar saw the NZ dollar fall to US62.03c at 8am today from US65.15c at 5pm last night and US65.95c at 8am yesterday.

Treasury's pre-election economic and fiscal update yesterday afternoon and a stronger US dollar after the $US700 billion ($NZ1.05 trillion) bailout of the US financial system became law on Saturday NZ time combined to weaken the NZ dollar.

European shares suffered their worst one-day percentage fall on record overnight, sinking to four-year closing lows as investors dumped shares across the board and Wall Street slumped.

"It's just in free fall. The outlook is still very bearish and we are nowhere near the bottom. There is no reason to buy anything at the moment. The bid-offer spread is huge," said Nicole Elliott, a technical analyst with Mizuho Securities.

ANZ senior economist Khoon Goh said the NZ dollar was already looking vulnerable heading into the London session.

"A lack of liquidity meant the NZ dollar could not cope with the flows sending it down several big figures in a short space of time."

He said the NZ dollar was last at similar levels in August and September 2006.

But the kiwi continued rising against the Australian dollar ahead of the Reserve Bank of Australia (RBA) monthly board meeting today.

The NZ dollar was buying A88.40c at 8am today from A86.50c at 5pm yesterday and A84.95c at 5pm on Friday.

The NZ dollar was buying 0.4608 euro at 8am from 0.4780 euro at 5pm yesterday and 62.37 yen from 67.60 at 5pm yesterday.

The trade weighted index was down to 61.13 from 63.39.

The Australian dollar, euro and yen were all down against the US dollar.

The Australian dollar fell to a three-year low of US70.05c, after falling 6.6 percent since yesterday's local close of US74.97c.

(Lead to follow)

NZPA Reuters WGT kc nb

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