N.Z. Dollar at 8-Year Low Versus Yen; Australian Currency Falls

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New Zealand’s dollar fell to an eight-year low against the yen and traded near its weakest in six years versus the greenback after the government said the economy will remain in recession until at least the end of March.

Demand for New Zealand’s currency also dropped as regional stocks slid for a second day, spurring concerns that investor demand for the nation’s higher-yielding assets will wane. The Australian dollar weakened to a two-month low on speculation the Reserve Bank of Australia will cut interest rates tomorrow to 3.25 percent, the lowest since at least 1964.

“There’s been a swath of gloomy data during the Asian session,” said Sue Trinh, a senior currency strategist at RBC Capital Markets, a unit of Royal Bank of Canada. “The risk- aversion theme has been in play with high-yielding currencies underperforming sharply.”

New Zealand’s dollar dropped to 45.01 yen, the weakest level since December 2000, before trading at 45.07 yen as of 6:27 p.m. in Wellington, from 45.85 yen at the end of last week in New York. The currency fell 1.2 percent to 50.31 U.S. cents.

Australia’s dollar dropped 1.2 percent to 56.63 yen from 57.33 late last week in New York. The currency slid 0.9 percent to 63.18 U.S. cents from 63.76 in New York. It touched 63.06 cents, the lowest since Dec. 5.

The New Zealand dollar may plunge more than 20 percent to a record low of 38.98 U.S. cents in coming months as the central bank cuts interest rates and the global slowdown saps investor appetite for riskier assets, Trinh said.

From Bloomberg News.