KEY POINTS:
The kiwi dollar proved a day sleeper like its avian namesake today.
After all the action overnight, where global financial turmoil was the backdrop for it to peak above US67.90c, then fall to below US66.50c, there was very little to report today as it fluctuated in a US0.53c
range.
At 8am today it was at US67.02 and rose to as high as US67.11c before dropping to as low as US66.58c in the afternoon. It finished at US67.03c.
BNZ currency strategist Danica Hampton said it was becoming evident that the financial crisis was a global problem and this was tending to support the US dollar.
US equity markets rebounded amid hopes US law-makers would revive the US Treasury's banking bailout plan. A recovery in investor confidence helped underpin risk sensitive currencies like NZD, particularly against "safe-haven" currencies like the yen, she said.
Over the past 24 hours the NZD/yen has rebounded from below 69.00 to above 71.00.
She said Reserve Bank of New Zealand Governor Alan Bollard had talked about the financial crisis last night, noting that while they were "monitoring current events in the financial markets very closely" the NZ banking system remained sound.
The crisis would result in medium-term effects for the NZ economy, but they would be dealt with through the normal monetary policy process.
The BNZ continued to look for the Reserve Bank to cut rates 50bps to 7 per cent in October and continue cutting rates until the OCR troughs at 6 per cent later in 2009.
"We continue to think bounces in the NZD/USD will be limited."
The US dollar gained against the yen and the euro as investors expressed optimism that US lawmakers will reach a deal on the financial rescue plan rejected yesterday morning (NZT).
At 5pm today, the NZ dollar was buying 0.4746 euro from 0.4667 at 5pm yesterday, while against the yen it was at 71.02 from 69.91.
Against the Australian dollar, the kiwi slid to A84.20c from A85.81c, with the trade weighted index lifting to 64.05 at 5pm from 63.50 at 5pm yesterday.
Currency rates:
NZ dlr/US dlr US67.03c US67.00c
NZ dlr/Aust dlr A84.20c A85.81c
NZ dlr/euro 0.4746 0.4667
NZ dlr/yen 71.02 69.91
NZ dlr/stg 37.56p 37.22p
NZ TWI 64.05 63.50
Australian dollar US79.60c US79.95c
Euro/US dollar 1.4129 1.4356
US dollar/yen 105.89 104.34
- NZPA