Kiwi dragged down by European concerns

The New Zealand dollar was weaker this morning as enthusiasm for the currency dropped with renewed concerns over the European economy.

The NZ dollar lost steam against the US dollar, as the latter gained strength with investors seeking out safe-haven currencies.

Against the Australian dollar, the kiwi also weakened as its counterpart recovered overnight from a dip following news a Labor minority government had been formed.

At 8am, the NZ dollar was buying US71.94c from US72.32c at 5pm yesterday, and it was A78.94c from A79.10c - it reached a high of A79.26 yesterday.

BNZ market strategist Mike Jones said when Julia Gillard was announced as prime minister, the knee-jerk response was to sell the aussie, but the losses were relatively short-lived.

The Australian dollar was at US90.45c at 5pm yesterday, and this morning was buying US91.12c.

Mr Jones said it "recovered some of its losses with the reduced political uncertainty and yesterday's marginally more hawkish than expected Reserve Bank of Australia statement no doubt providing some support".

The RBA left rates on hold at 4.5 percent as expected, as inflation posed few problems and the global outlook remained uncertain.

Against the "safe-haven" yen, the NZ dollar also dropped, buying 60.29 at 8am today from 60.83 at 5pm yesterday.

As the euro continued to slide because of concerns about its banking sector, the kiwi was firm buying 0.5665 euro this morning from 0.5652 yesterday.

The trade weighted index fell to 67.06 from 67.21.

- NZPA