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Kiwi extends slide as equity markets weaken, euro economy shrinks

The New Zealand dollar weakens against the greenback as global equity markets extend their slide and data shows the eurozone economy continues to shrink, eroding the appeal of growth linked assets such as the kiwi.

The New Zealand dollar fell to 80.92 US cents from 81.22 cents at 5pm in Wellington yesterday. The trade-weighted index slipped to 72.75 from 72.88.

Stocks fell on Wall Street after Wal-Mart gave guidance that disappointed investors. The Dow Jones Industrial Average was down 0.3% and key benchmarks in Europe fell.

Data showed the eurozone's gross domestic product dropped 0.1% last quarter and a Reuters poll of more than 70 economists predicted the bloc's new recession will extend until the end of the year and 2013 promises little better than stagnation.

"Another gloomy night in US and European equity markets has dented sentiment towards high-risk currencies like the NZD," says Mike Jones, currency strategist at Bank of New Zealand.

The kiwi fell to 63.35 euro cents from 63.72 cents and fell to 51.05 British pence from 51.21 pence.

It gained to 65.66 yen from 65.12 yen amid speculation Japanese elections next month will usher in the opposition LDP party, which may hasten efforts to weaken the Japanese currency.

It rose to 78.28 Australian cents from 78.14 cents yesterday.

(BusinessDesk)

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