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NZ dlr off lows, risk appetite dominates; debt firm
Reuters - Tuesday, November 11
WELLINGTON, Nov 11 - The New Zealand dollar <NZD=> remained under pressure on Tuesday on concerns about the global economic outlook, but gained a late session lift after Asian stock markets staged a recovery.
The kiwi had dropped almost two cents from $0.60 in offshore trading after Wall Street stocks turned lower again as investors returned their focus onto the threat of a global recession.
"Improving risk sentiment would favour NZ dollar strength, though the market seems unable to sustain any optimism for more than a day or two," said Westpac markets economist Michael Gordon.
At 0410 GMT the kiwi was at $0.5884/94 compared with $0.5963/73 in late local trade on Monday.
The kiwi remains largely driven by investor appetite for risk, continuing to closely track gyrations in global equity markets.
Support kicked in at session lows around $0.5795 and the kiwi perked up in short order as Asian markets trimmed their early losses.
Activity in the offshore session was expected to be dampened by the U.S. Veterans Day holiday.
The Reserve Bank of NZ releases its six-monthly financial stability report on Wednesday, which will give a look at how the global financial crisis is seen hitting New Zealand and whether the central bank sees the need for further action.
New Zealand bonds rallied in line with offshore markets as shares fell, prompting demand for safe-haven debt.
The yield on the benchmark 10-year bond <NZ10YT=RR>, which moves inversely to prices, closed 7 basis points lower at 5.93 percent.
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