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NZ Dollar Recovers From Multi-Year Lows Vs Yen, Euro

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Dec 8 NZPA - The New Zealand dollar hit multi-year lows against the euro and yen, and came close to doing the same against the greenback, before starting a steep climb out of the hole.

Early on Saturday the kiwi dropped to around US52c, its lowest level in six years apart from a lower dip two weeks ago.

By 8am today the NZ dollar had lifted to US53.44c, barely changed from its position at 5pm on Friday.

Bank of New Zealand currency strategist Danica Hampton said the NZ dollar was initially pitched lower by renewed fears of a deep and prolonged global recession.

Data showed US employers cut payrolls by a much larger-than-expected 533,000 in November, the sharpest monthly loss since 1974.

Ms Hampton said reignited global recession fears saw commodity prices plummet and encouraged investors to dump growth-sensitive currencies such as the NZ dollar.

But a sharp recovery in US stock markets helped revive investor confidence and lift the kiwi off its lows against the US currency.

Against the euro, the kiwi fell to a 10-year low around 0.4105, but recovered to be 0.4200 by today's local open from 0.4180 at 5pm on Friday.

The NZ dollar also dropped to around 47.75 yen, its lowest level in more than seven years. By 8am today it was up to 49.75 yen from 49.36 at Friday's local close.

Against the Australian dollar, the kiwi was buying A82.63c at 8am, little changed from its position on Friday evening. The trade weighted index slipped to 54.07 at 8am from 54.14 at 5pm on Friday.

Among those thinking the NZ dollar could go lower was Prime Minister John Key who appeared to slip into his old role as a money trader on television yesterday and happily mused on the New Zealand currency's fortunes.

He said he believed the dollar could trade below US50c in the near future and below 80 Australian cents.

Prime ministers and their finance ministers usually avoid talking about the dollar's prospects, unless they intentionally want to talk its prospects up or down -- as even the mention of it moving one way or the other can spook investors.

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