The New Zealand dollar settled yesterday above US67c following a wild ride in overnight trading, as the euro hit a four-year low against the US dollar.
The kiwi initially fell from US67.8c late on Tuesday to US67c before spiking up US1.4c to US68.4, then fell off to US67.6c.
It was trading up slightly, about US67.6 yesterday.
However, the kiwi rallied against the Australian dollar, rising from A80.4c to A81.26c after the Reserve Bank of Australia retained its benchmark cash-rate at 4.5% on Tuesday.
The euro fell to a fresh four-year low against the United States dollar on signs the eurozone's debt crisis was spreading to its banking system, NZPA reported.
The European Central Bank (ECB) has warned that eurozone banks face up to 195 billion euros in a "second wave" of potential loan losses over the next 18-months due to the financial crisis.
The central bank (ECB) said it had increased purchases of eurozone government bonds.
Craigs Investment Partners broker Peter McIntyre said the euro sank on expectations of worsening economic news out of Europe, particularly Spain, amid similar concerns the malaise could spread to the United Kingdom.
"All eyes" were now on the Reserve Bank of New Zealand and whether it would shift its official cash rate later this month, which remained a "50-50 call" by analysts, Mr McIntyre said.
The Australian dollar opened lower yesterday against the greenback, giving up earlier gains as investors moved from risk assets because of ongoing concerns in the eurozone and fears in the Middle East, AAP reported.
Canadian Forex corporate dealer Darren Richardson said the release of solid manufacturing figures in the US led to an equities rally early in the overnight session, but "... in the later part of the market, we saw some fears grow in the Middle East along with the euro problems".
Investors began taking profits then moved away from equities and commodities.
