New Zealand dollar plummets on stock market fears

Sep 22, 2011, 23:15 GMT

Wellington - The New Zealand dollar fell to a six-month low against the US dollar Friday as the stock market opened amid fears it would follow tumbling prices on Wall Street and in Europe.

The kiwi dollar was trading at 77.5 US cents after shedding more than 4 cents in two days.

Finance Minister Bill English welcomed the fall.

'For us it's good news that that exchange rate is coming back, provided it doesn't drop precipitously,' he told Radio New Zealand from Washington, where he is attending World Bank and International Monetary Fund meetings.

'Having it come back into the 70s will give our exporters, who are under pressure, some relief and the prospect that we could look forward to more growth in the future from exports.'

The New Zealand share market opened nervously following a steady day Thursday, when the benchmark NZX 50 index finished up 0.1 per cent at 3312.28. It has changed little from the start of the year.

The NZX 50 dropped 60.65 points to 3251.62 as the New Zealand Stock Exchange, the first to open in the world every day, began trading.

Analyst Paul Harrison, head of equities at BT Funds Management, was quoted on the Stuff news website as saying he did not expect the local stock exchange to decline as much as overseas because it did not have the financial and resources stocks that were 'getting smashed around.'

He predicted it might fall by about a third of the decline of the Dow Jones Industrial Average, which dropped more than 3 per cent on Thursday.

'The New Zealand market is shielded by reasonable demand, partly for Telecom from offshore shareholders,' Harrison said. 'A reasonable component of our market is made up of property stocks and people are looking to add to those to their portfolios for their yields versus what they can get at the bank for their deposits.'