The New Zealand dollar slowly recovered yesterday after it fell to its lowest level against the greenback in nearly four weeks overnight after a shelling exchange on the Korean peninsula added to the US currency's appeal as a safe haven.
The NZ dollar was at US76.21c at 5pm as it
continued its retreat away from the 31-month high around US79.75c reached in early November. At 8am the NZ dollar was buying US76.15c, down from US77.06c at 5pm on Tuesday.
Asian sharemarkets were mostly weaker as investors continued to seek safety in the US dollar market.
BNZ markets strategist Mike Jones said news of the Korean artillery exchange had scuppered risk appetite, and immediately had an impact on regional currencies and equity indices.
"Just what we needed when the markets were already pressured by concerns that Ireland may not have the political will and ability to see through any rescue agreement," Jones said.
US national security aides met yesterday to develop a response to North Korea's shelling of a South Korean military installation. The US dollar's appeal has also been supported by worries that a rescue package for Ireland will not prevent other heavily indebted European countries from seeking aid.
"We're seeing a knee-jerk reaction to Korea but the underlying story is still the European debt crisis and contagion fears," said strategist John Doyle. "That will drive trading for the rest of the month. Korea is a sideshow."
After a bumpy night, the NZ dollar was at A77.87c at 5pm from A78.10c at the same time on Tuesday and it was at €0.5691 from €0.5674. It was at 63.45 from 64.22.
The trade weighted index was at 68.74 from 69.04 on Tuesday.
- NZPA
