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NZ Dollar Slumps As Risk Aversion Rises

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, June 27 NZPA - The New Zealand dollar slumped overnight, with a sharp slide against the yen as risk aversion rose.

At the same time the United States dollar fell broadly, following on from the Federal Reserve's rate decision early yesterday that saw it dash expectations of an imminent rate hike, as it held interest rates at 2 percent .

Fresh concern about the US banking sector, a sharp slide in US stocks, and Fitch Ratings' downgrade of General Motors and Chrysler LLC's credit ratings also weighed on the greenback.

But even with the greenback's general weakness, the NZ dollar still slid against the US currency and by 8am was buying US75.57c, having touched a week-low around US75.40c overnight, from US75.78c at 4.30pm yesterday.

The kiwi was also buying 80.62 yen at today's local open, having got to a two-week low around 80.50 overnight, from 81.81 at 4.30pm.

Bank of New Zealand currency strategist Danica Hampton said rising risk aversion appetite, as global equity markets fell 2-3 percent across the board, encouraged heavy selling of NZ dollar crosses, particularly against the yen.

Market attention was now fixed firmly on the first quarter gross domestic product data release due at 10.45am today, she said.

Against the Australian dollar, the kiwi got down to around A78.75c, the lowest level in nearly seven years. By 8am the NZ dollar was back up to A79.04c, little changed from A78.99c late yesterday afternoon.

The NZ dollar continued its slide of the past week or so against the euro, getting down to around 0.4790, and by 8am was buying 0.4794, from 0.4832 at 4.30pm. The trade weighted index was down to 67.28 at 8am from 67.68.

NZPA WGT Reuters mjd kn

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