The New Zealand dollar fell against the US and Japanese currencies, as markets remained on tenterhooks waiting for a deal to raise the United States debt ceiling, and as rumours flew that Japanese monetary authorities were about to intervene to force the yen lower. Markets also reeled after data showed USmanufacturing grew at its slowest pace in two years in July, casting doubt on expectations the faltering US recovery will quickly regain steam. By 8am the NZ dollar was buying US87.68c, down from US88.20c at 5pm yesterday, and after having reached a post-float high US88.39c in early afternoon trading. The kiwi was also down to 67.63 yen at 8am from 68.40 at 5pm, following a 15-month high near 68.90 yen early yesterday afternoon. BNZ currency strategist Mike Burrowes said the NZ dollar had fallen as a bout of risk aversion entered markets, driven by worries about global growth and peripheral European economies. The foreign exchange market was on high alert for signs of action from Japanese monetary authorities to weaken the yen after a huge bank order to buy US dollars raised eyebrows. Traders said the move did not appear to be intervention by Japan but the timing of the brief spike in the US dollar, coming as it did after it neared a record low versus the yen, left the market jittery. The NZ dollar did push higher against the European currency, from 0.6124 euro at 5pm to 0.6150 at 8am, after peaking near 0.6170 early today. Yields on Italian and Spanish bonds continued to rise, suggesting persistent worries about the risk of contagion in the euro zone crisis and adding to risk aversion in the market. The kiwi edged higher to A79.95c against the aussie, while the trade weighted index dropped to 74.85 at 8am from 75.01 at 5pm.
