Kiwi slumps on North Korean concern

RICHARD MEADOWS
Last updated 08:50 25/01/2013

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The New Zealand dollar slumped against the greenback overnight as North Korean threats of further nuclear testing sent jitters through the market.

The kiwi this morning traded at US83.77c, down more than half a cent from US84.30 at 5pm yesterday. On the Trade Weighted Index against major trading partners' currencies it was unchanged at 75.60.

North Korea's top military body announced it was planning further rocket launches and a nuclear test targeting its "sworn enemy" the United States, pushing investors out of risk-linked currencies and into safe havens.

HiFX senior currency strategist Alex Hill said the nuclear threat was the first since 2009.

"That always gives the markets a bit of a jitter, when those guys start beating chests," he said.

Evening trading was also punctuated by yen weakness, after a Japanese minister spoke of being comfortable at the prospect of a 100yen/US$1 cross.

The Australian dollar also sank after a Reserve Bank of Australia board member talked about having to "actively manage" the economy, a veiled reference to further interest rate cuts.

On the crosses, the kiwi recently traded at 83.77 Australian cents, up sharply from A80.10c yesterday, and 75.34 yen, up from 75.18 yen earlier. The kiwi opened at 62.65 euro cents, down from 63.29 euro cents, and 53.05 pence, down from 53.23 earlier.

Hill said the overnight dip was nothing to get too excited about, with the kiwi still broadly ranging between the mid-US83c and the mid-US84c mark.

He expected it to trade within a range of US83.50c to US84.20c today.

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- BusinessDay.co.nz

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