Kiwi drops after North Korea fires missile

The New Zealand dollar fell against the yen after North Korea fired a ballistic missile over Japan’s northern island of Hokkaido, sapping risk appetite.

News that a cattle disease had been detected on another three properties also weighed on the currency.

The kiwi was at ¥78.58 as at 5pm yesterday versus ¥79.24 at 8am and from ¥78.96 late on Monday.

The yen — widely considered a safe haven — jumped to a four-month high against the US dollar in Asian trading. The kiwi was at US72.25c from US72.38c late on Monday.

“It’s mostly North Korea but then the cattle disease headlines had an impact,” said Westpac Banking Corp senior markets strategist Imre Speizer.

The missile — the first Pyongyang has fired over Japan’s main islands since 2009 — sparked a harsh response from Japanese Prime Minister Shinzo Abe. “This outrageous action of firing a missile over our country is an unprecedented, grave and seri- ous threat that seriously damages peace and security in the region,” he said, according to the Wall Street Journal. “We have firmly protested to North Korea.”

Speizer said markets are now watching and waiting for any reaction out of the US.

“It’s not clear what they will do and until it looks like it will escalate the market will take the view that it’s bad but things always calm down, or at least they have so far,” he said.

The kiwi also lost ground when the Ministry for Primary Industries said three new properties tested positive for the bacterial cattle disease Mycoplasma bovis, bringing the total number of infected farms to six.

The kiwi dollar fell to €60.32c from 60.70c on Monday. It slipped to A91.12c from A91.17c and traded at 55.82p from 56.18p. The kiwi fell to 4.7735 yuan from 4.8051 yuan.

The two-year swap rate fell 2 basis points to 2.14 per cent while the 10-year swaps fell 4 basis points to 3.08 per cent.