NZ dollar plunges amid market fears
8:50 AM Friday May 7, 2010

The New Zealand dollar plunged against the currencies of the United States and Japan as fears of contagion stemming from the Greek debt crisis escalated.

After charging up yesterday to a peak around US72.75c on the back of stunning job figures and a speech by Reserve Bank Governor Alan Bollard, the kiwi fell fast early today. According to Reuters figures it dropped to a month low around US70.10c before pulling out of the dive to be at US71.07c by 8am today.

Adding to the overnight drama, US stocks plunged suddenly and briefly by more than 9 per cent before pulling back to a near 3 per cent drop. Some reports were blaming a trading error at a major firm for the sharp dive.

The European Central Bank also left interest rates at a record low 1 per cent, as expected, with President Jean-Claude Trichet saying the ECB had not considered buying government debt to stop the euro's rout, as some had speculated, and a Greek default was "out of the question".

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