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NZ Dollar Dips To 6-1/2-yr Low Vs Aussie, Slips Vs Greenback

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, June 11 NZP A - The New Zealand dollar slipped further overnight against the greenback and dipped to a 6-1/2-year low against the Australian currency.

Early today the kiwi dropped to around US75c -- its lowest level against the United States currency in nearly five months -- from US75.62c at 5pm yesterday.

By 8am today it had recovered some ground to US75.31c.

During the overnight session the NZ dollar also dipped to around A79.15c -- the lowest level since November 2001 -- before lifting to A79.59c by today's local open, just slightly down on the A79.68c at 5pm yesterday.

At the same time, the US dollar was soaring against the euro , and hit a 3-1/2-month peak versus the yen after Federal Reserve Chairman Ben Bernanke continued his tough talk on inflation, boosting expectations of higher interest rates.

He said the US central bank would resist rising inflation expectations and added that the latest surge in energy costs was stoking price pressures.

He also said the risk of a sharp downturn in the US economy had receded, sending US bond yields soaring and putting the euro on track for its biggest two-day decline against the greenback in three years.

Today, Bank of New Zealand currency strategist Danica Hampton said the past few sessions had illustrated the sharp contrast between the outlook of the Reserve Bank of New Zealand and that of most other central banks.

Flows through the BNZ's books showed NZ dollars continuing to change ownership. Onshore customers were busily hedging earnings and assets while a mix of macro funds, momentum funds and some sovereign accounts were noted sellers.

The NZ dollar made slight gains overnight against the euro and yen, buying 0.4871 euro at 8am from 0.4854 at 5pm yesterday.

Against the yen, the kiwi was at 80.84 by today's local open from 80.70, while the trade weighted index at 8am was 67.68 from 67.69.

NZPA WGT Reuters mjd kn

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