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NZ Dollar `Spooked' By RBNZ

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, April 1 NZPA - The New Zealand dollar wobbled against the United States greenback on car news today, but dropped more than a cent against the Uncle Sam when it couldn't avoid an unexpected Bollard.

It was worth US55.74c at 5pm today, more than a cent down from US56.82c at the same time yesterday.

The real impact was Reserve Bank governor Alan Bollard's unusual move of commenting on his concern at recent rises in long-term wholesale interest rates, said BNZ Capital currency strategist Danica Hampton.

The kiwi dropped from about US57c to under US56c just after 9am when the comments were released.

Dr Bollard's remarks really spooked investors that if monetary conditions continued to tighten the bank could take unconventional measures, Ms Hampton said.

A bit of volatility then followed after misreported statements from US President Barack Obama, that were later clarified, that he might let the automakers fail.

The key level to now watch on the downside was US55.50c, Ms Hampton said.

"I think a convincing break below that level would open up a more significant move lower but in the near term I think bounces will continue to find sellers and I think US56.50c will be the topside."

The kiwi was up to A82.90c against the Australian dollar at 5pm, from A82.54c at the same time yesterday.

It was down to 0.4219 euro from 0.4288, down also against the Japanese yen to 54.99 from 55.88, and down to 38.96p from 39.69p against the British pound.

The trade weighted index dropped to 56.01 from 57.03.

Meanwhile, the yen surged broadly on Wednesday after a report that President Obama was prepared to let carmaker Chrysler go bankrupt, stirring risk aversion in the market and helping the yen to reverse losses against the dollar and the euro.

The US dollar fell 0.2 percent from late New York trade to 98.76 yen. It tumbled as low as 98.21 yen on trading platform EBS from an earlier high of 99.48 yen, the highest since March 5.

The euro fell 0.3 percent to 130.80 yen after falling as low as 129.94 yen from earlier highs near 131.90 yen.

The euro was down 0.5 percent to $1.3185 near day's lows.

NZPA WGT Reuters dw kn

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