N.Z. Dollar Falls as Bernanke Comments Prompt Flight to Safety
Feb. 26 (Bloomberg) -- The New Zealand dollar fell to its lowest level in almost eight weeks after Federal Reserve Chairman Ben S. Bernanke defended the U.S. central bank’s asset purchases, decreasing demand for risk assets.
The so-called kiwi declined versus all 16 of its most- traded peers after Bernanke said the Fed’s unprecedented stimulus actions are supporting economic expansion with little risk of inflation or asset-price bubbles. Australia’s dollar also fell against most major counterparts following Bernanke’s comments, erasing an earlier advance that came amid increasing metal prices.
“The New Zealand dollar is badly underperforming,” Adam Button, a currency analyst at Forexlive.com in Montreal, said in a telephone interview. “We saw a knee-jerk reaction to buy U.S. dollars and sell commodity currencies after Bernanke’s comments.”
New Zealand’s dollar depreciated 0.9 percent to 82.63 U.S. cents at 2:31 p.m. in New York after falling earlier to 82.24, its lowest level since Jan. 4. The kiwi fell 0.7 percent to 75.93 yen after reaching 75.18, its weakest since Jan. 28.
The Australian dollar decreased 0.1 percent to $1.0243 after declining to $1.0201, its lowest since Oct. 10. The so- called Aussie was little changed at 94.21 yen.
The MSCI Asia Pacific Index declined 0.6 percent. The Standard & Poor’s GSCI Index of raw materials fell 0.8 percent.
New Zealand’s dollar has strengthened 2.2 percent this year, the third-biggest increase among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The Aussie has gained 0.7 percent, and the U.S. dollar has increased 2.5 percent.
--Editors: Kenneth Pringle, Dave Liedtka