Kiwi dollar survives ‘flash crash’

The New Zealand dollar was little changed at the end of a rollercoaster day driven by a “flash crash” on global currency markets that was probably caused by computer-driven trading in thin, holiday-dampened activity.

Meanwhile, overall negative sentiment was reinforced by a string of bad news that sent investors fleeing to safe havens such as the US dollar.

The kiwi was trading at US66.24c from US66.27c.

The trade-weighted index eased to 72.61 points from 72.87.

“All the excitement came in the morning and it was predominantly in currency markets,” said Mike Shirley, a senior trader at Kiwibank.

“It looks to have been a ‘flash crash’ driven by computer trading — it’s a Japanese holiday so they’re out,” Shirley says.

“There was a lot going on at the time, but it wasn’t enough to have caused what happened — it’s all very much a risk-off theme.”

The Japanese currency was another beneficiary of the flight to safety, the New Zealand dollar trading at 70.98 yen from 72.42 yen.

Against the British pound, the kiwi traded at 52.77 pence from 52.74 pence, at 58.29 euro cents from 58.63 cent, and at 4.555 Chinese yuan from 4.5631 yuan.

In interest rate markets, the twoyear swap rate rose to 1.9324 per cent from 1.8925 per cent while the 10-year rate rose to 2.554 per cent from 2.515 per cent.