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NZ Dollar Gains On Weakening Greenback

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, June 19 NZPA - The New Zealand dollar firmed against a weakening greenback in quiet trading today.

The US dollar fell as investors grew sceptical the Federal Reserve would raise interest rates aggressively, given the weak economy and renewed worries about the financial sector.

Equity markets fell heavily on concern about a weak US economy compounded by credit sector concerns.

More bad news from the financial sector pressured the US dollar as investors believed weakness in the credit and lending system would make the Fed less likely to withdraw liquidity from the banking system by tightening monetary policy.

Equity market weakness has tended to undercut the kiwi during the credit crisis, particularly as there is growing concern about the weakness of the local economy, but the kiwi rode it out today.

It closed on its opening level of US75.86c, having risen from US75.62c at yesterday's close.

Bank of New Zealand currency strategist Danica Hampton said the the NZ dollar was squeezed higher as the US currency weakened.

While the kiwi did flirt with US76c overnight, most traders seemed to be reluctant to push it higher, she said. The downturn in equity markets had seen risk appetite drop which should temper appetite for high-yielding currencies such as the NZ dollar, she said.

Against the Australian dollar the kiwi ended virtually unchanged on A80.07c while the trade weighted index edged up to 68.05 from 68.01 at 4.30pm yesterday.

NZPA WGT Reuters sml gt

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