The New Zealand dollar fell below 65 US cents as investors spooked by terrorism attacks in Paris favour so-called safe haven assets.
The kiwi touched a six-week low of 64.66 US cents, and was trading at 64.92 cents at 8am in Wellington, from 65.27 cents at 5pm yesterday. The trade-weighted
index dropped to 70.99 from 71.27 yesterday.
Investors are seeking the safety of the greenback and the yen and eschewing commodity-linked currencies such as the kiwi following Friday's terrorist attacks in Paris. The local currency already faced downward pressure amid expectations the Reserve Bank will probably cut interest rates further next month, in contrast with the Federal Reserve in the US which is expected to hike rates.
"The New Zealand dollar is caught by a 'risk off' kind of attitude," said Derek Rankin, director at Rankin Treasury Advisory. "People basically feel a little bit more worried, they want to go more for safety and New Zealand gets sold in that situation. I think it is just a temporary thing. It will just take a couple of days to pass through."
Tonight's GlobalDairyTrade auction, where NZX milk futures are predicting a decline, is likely also weighing on the kiwi, Rankin said. Dairy products are New Zealand's largest commodity export.
