The New Zealand dollar traded above US68c yesterday, as currencies worldwide fluctuated wildly on speculation of regulatory market reforms.
Craigs Investment Partners broker Chris Timms said commodities, interest rates, precious metals and and bank swap rates had all been hit by volatility this week, spurred by events in Europe "which was in a state of semi-chaos" and the perceived effects on China's's economy.
"What has been driving currency markets for the past two days has been talk of regulations hitting the banks and [stock] markets; further compounded by Germany's ban on naked short trading," Mr Timms said.
While the United States dollar gained strength during the past 24 hours, gold came off a record high of $US1248.95 last week to trade down to less than $US1200 on the spot gold market, with investors rallying to the US dollar as a safe haven, as opposed to gold.
"When gold hits a new high, there will always be some profit-taking [sellers]," Mr Timms said, however, it would always maintain its safe haven status.
The kiwi strengthened against the Australian dollar, moving from A80c to as high as A81.33c yesterday.
Also of concern to investors was that Europe was China's biggest export market and any weakness in Chinese exports would affect global economic expectations and recoveries, he said.
European leaders were stepping up their attack on what they characterised as greedy and ruthless speculators, accusing them of worsening the continent's government-debt crisis.
But analysts said some of the measures they were taking could backfire by undermining the euro instead of supporting it, AP reported from London.
In the space of a few hours on Tuesday, EU governments overrode British objections and US worries to tighten rules for hedge funds, and Germany's securities regulator unilaterally announced curbs on traders of government debt and bank stocks.
The unexpected decision by Germany to ban naked short-selling of euro-zone government bonds, as well as shares in 10 key German financial institutions, sent shockwaves through the markets on Wednesday.
