The New Zealand dollar extended its decline overnight as fears over Europe's ability to meet ballooning debt repayments linger, after a Spanish government bond auction fell short of expectations.
The kiwi dollar was at 76.26 US cents just before 8am, down from 76.68 cents yesterday a 5pm.
Investor sentiment was
dented, with the Euro falling 1 cent to US$1.3440, after the Spanish government sold 3.56 billion euros in a new 10-year bond for an average yield of 6.98 per cent up from 5.43 per cent when it sold the securities on October 20.
It was seeking to raise 4 billion euros from the sale. That yield is just short of the 7 per cent line in the sand markets put in place for Italian 10-year bonds.
The European Central Bank reportedly bought Spanish and French government bonds overnight in an attempt to ease concerns the region's third-largest economy will be unable to handle its debt repayments, giving the euro a temporary reprieve. The yield on 10-year French government bonds fell 6.1 basis points to 3.57 per cent, and the yield on 10-year Spanish bonds declined 1.1 basis points to 6.51 per cent.
