Investors lose $4.6b, kiwi dollar nosedives
The New Zealand dollar has gone down much faster and further than anyone had expected. All this is a direct result of global financial jitters. Ironically, many investors are now buying US dollars again - it was the US housing market starting the global financial woes.
The kiwi dollar has nosedived into a frightening free fall, plunging by US3c, while the sharemarket has taken a massive hammering, wiping hundreds of millions in a black day for New Zealand investors.
The New Zealand currency suffered the biggest slump in 20 years amid panic selling as the dollar crashed as low as US68.2c yesterday, before rebounding slightly.
International stocks – particularly in Asia – were racing towards their biggest daily fall since the terrorist attacks on the United States in September 2001. Late last night, European markets appeared set to follow their Asian peers.
The Kiwi dollar was the casualty of a torrid flight to safe investments by global investors – exiting their high-risk bets on the Kiwi currency for the safer bonds and cash deposits. The fear of a worldwide credit crunch is scaring investors on world sharemarkets, with share prices on a rollercoaster ride.
New Zealand investors have seen $4.6 billion wiped off the value of shares in the top 50 stocks in the past three weeks due to uncertainty about the health of world markets.
The falling dollar has already hit Kiwis in their wallets, with BP boosting petrol prices by three cents a litre last night.
BP spokeswoman Diana Stretch said the dollar's fall, combined with a rise in oil prices, had increased prices for 91 and 95 octane to $1.56.9 and $1.61.9, respectively.
Diesel rose to $1.05.9.
Shell was resisting a similar move, but spokeswoman Jackie Maitland conceded "the dollar wasn't helping".
Shell planned to review its position today.