Dollar halts downward slide

Close - Feb 9

The New Zealand dollar managed to arrest a downward slide against US dollar today, as exporters fought against the kiwi being sold off heavily.

Around 8am today the kiwi was buying US68.62c, having been able to push only as high as about US69.20c overnight. It sank to a low of US68.15 around 11am before recovering US68.54c at 5pm today.

BNZ Capital senior strategist Danica Hampton said Asian equity markets this morning were weak and the dollar was sold heavily.

"But we have seen dribs and drabs of demand from a wide variety of exporters and as a result we have seen the kiwi stabilise and lift off its lows as the day has progressed."

Prime Minister John Key today signalled an increase in GST, across-the-board tax cuts and getting more tax out of property investors, but there was not a lot of trader reaction as not as much detail was revealed and there was no news on the housing front, she said.

"He did give the gist but there wasn't much in the way of meaty specifics. But I do think it will be interesting to watch this space in the lead up to the budget and whether we see any material changes to the likes of tax policy.

"The global sentiment will be the key driver in the near term, with people keeping an eye on the local data."

Against the Australian dollar the kiwi was down slightly to A79.10c at 5pm from A79.36c yesterday and down to 43.93 British pence from 44.01p.

It also slipped to 0.5009 euro from 0.5034 yesterday and to 61.28 Japanese yen, from 61.32.

The trade weighted index dropped to 63.74 from 63.98.

In overseas foreign exchanges the euro inched up against the dollar on Tuesday but remained within sight of an 8- month low hit last week, dogged by persistent worries about the fiscal health of some euro zone countries.

Speculation emerged in the market that a rescue for struggling Greece would be formed soon, after news that European Central Bank President Jean-Claude Trichet is leaving a Sydney meeting of central bankers early to attend a European Council meeting.

Investors have been waiting to see what arises from the meeting, set for Thursday, as the bloc grapples with a debt crisis in Greece and budget concerns in other member states.

But market activity was subdued as investors were unwilling to place big bets due to concerns about sovereign credit risks in the euro zone, traders said. The euro edged up 0.1 percent from late US trading on Monday to $1.3667.

The euro fell to $1.3585 on trading platform EBS last week, its lowest since May 2009.

The euro rose 0.3 percent against the yen to 122.17 yen, after dropping to 120.70 yen on Friday, its lowest in about a year.

The dollar index, a measure of its performance against six major currencies, edged up 0.1 percent to 80.362. The greenback was up 0.1 percent against the yen to 89.38 yen.

Among higher-yielding currencies, the Australian dollar was trading around $0.8646, up 0.1 percent on the day but not far from a five-month low of $0.8578 touched last week.

- NZPA