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NZ Dollar Plunges As US Dollar Rises

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Sept 3 NZPA - The New Zealand dollar fell down the proverbial elevator shaft today, shedding nearly two United States cents since yesterday's close.

A bout of selling hit the currency in late afternoon trading when it had already been eroded by strength in the US dollar.

The cut in interest rates in Australia also reminded the so-called carry traders that interest rates are moving downward in this part of the world.

The New Zealand dollar was at US67.45c by 5pm, down from US69.30c at the same time yesterday.

The currency traded at its lowest level since August 17 last year when it reached US66.43c. The New Zealand dollar held for awhile around US68c but then gave way.

"It has been a really rapid move," Bank of New Zealand currency strategist Danica Hampton said. "It looks like it is in free-fall at the moment."

She looked back at trading last August when the global credit crisis knocked the currency market around and there were rebounds from sharp falls.

Technical indicators suggested the NZ dollar was oversold, she said.

"I wouldn't be surprised to see a ping back in the next day or so," she said.

The US dollar rose to a 10-1/2 month high overnight as measured by a basket of major currencies, boosted by a sharp drop in oil prices, to below $US106 a barrel at one point, and persistent concerns about the health of other major global economies.

The greenback also drew support from weakness in high-yielding currencies triggered by the Reserve Bank of Australia's interest-rate cut by 25 basis points to 7 percent, as expected.

The strength in the US dollar was a theme for most of the domestic session today and there was selling from Asian accounts. The NZ dollar plunged to 73.50 yen at 5pm from 75.01 at the same time yesterday.

By today's local close the NZ dollar was buying A81.70c from A81.25c at 5pm yesterday.

Against the euro it was at 0.4672 from 0.4752. The trade weighted index was 63.97 at 5pm from 65.01 at 5pm.

NZPA WGT Reuters pjg kn

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