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NZ Dollar Slips Vs Greenback As Risk Appetite Diminishes

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Feb 24 NZPA - The New Zealand dollar fell through much of the night against the greenback, as uncertainty about the United States' latest bid to shore up ailing banks diminished the appetite for riskier assets.

The kiwi did climb around half a cent for the first few hours after 5pm yesterday, topping US51.80c around 9pm, but it then slipped away to be buying US50.92c by 8am.

BNZ Capital currency strategist Danica Hampton said that through the first half of the night, risk appetite and demand for growth sensitive currencies such as the NZ dollar was bolstered by hopes the US government would provide further assistance for beleaguered banking giant Citigroup.

But the buoyancy in the kiwi against the greenback did not last, Ms Hampton said.

Investors worried the US Treasury's new bank recapitalisation plan would not be enough to stabilise the banking system, while European Central Bank president Jean-Claude Trichet warned the European financial system was under severe strain.

"Global equity markets swiftly turned south, risk aversion resurfaced and investors trimmed exposures to NZD in favour of the relative safety of the USD."

The kiwi strengthened against the European and Japanese currencies, buying 48.23 yen and 0.4 euro at 8am from 47.60 yen and 0.3968 euro at 5pm yesterday.

The NZ dollar was little changed against its trans-Tasman counterpart at A79.01c when the local market opened, while the trade weighted index was 52.02 at 8am from 51.93 at 5pm.

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