The New Zealand dollar fell to its lowest level since February today as nervous investors continued to get out of investments they regarded as risky.
The NZ dollar fell as low as US68.27c but found support and was US68.55 by 5pm. This is down from US69.50c yesterday.
Commentary from Reserve Bank of New Zealand governor Alan Bollard about this country's exposure to the financial volatility exacerbated already negative sentiment.
BNZ strategist Mike Jones said the NZ dollar looked fairly sick throughout the whole day.
The real kicker to the NZ dollar's decline was a move on Tuesday by Germany's market regulator to ban so-called naked short-selling of eurozone government debt and shares of major financial companies.
It was seen as an attempt to strengthen control of volatile markets. Mr Jones said the markets just smelt fear.
"We have seen risky assets right across the board sold heavily and the NZ dollar was no exception," he said.
Dr Bollard said the outlook for New Zealand's financial system has improved over recent months, as the economy recovered. "However, the global financial markets remain fragile," Dr Bollard said at the release of the latest Financial Stability Report this morning.
Mr Jones said the report weighed on an already fragile NZ dollar. Economists have said that tomorrow's New Zealand government budget is likely to show a better financial position that many countries but the property sector is waiting to see what tax policy decisions will affect it.
Against the euro, the NZ dollar was 0.5618 at 5pm from 0.5640 at 5pm yesterday.
The euro fell to a fresh four-year low against the US dollar in Asia and sterling fell to its lowest in nearly 14 months against the US dollar.
The Australian dollar fell sharply to US85.47c from US87.14c yesterday.
The NZ dollar rose to A80.15c from A79.76c at 5pm yesterday. It was down to 62.97 Japanese yen from 64.30 yen yesterday.
The trade weighted index was down to 66.71 at 5pm from 67.18 yesterday.
- NZPA
Negative sentiment drives NZ dollar below US69c
AdvertisementAdvertise with NZME.