The currency traded at its lowest level in a week after the G-7 said the global economic slowdown may worsen amid an ``entrenched'' credit squeeze in an April 11 statement. U.S. stocks fell the most in five weeks after General Electric Co. said the credit-market crisis caused an unexpected earnings decline, prompting traders to sell higher-yielding assets bought with loans from Japan in so-called carry trades.
New Zealand's currency bought 78.96 U.S. cents at 10:45 a.m. in Wellington from 79.32 cents in late New York trading on April 11. The currency bought 79.93 yen from 80.09 yen.
New Zealand's benchmark rate is 7.75 percentage points higher than Japan's, making the currency a favorite for carry trades, which involves getting funds in a country with low borrowing costs and buying assets where returns are higher.
Carry trades are considered risky because the profits between the two interest rates can be erased if the currencies move. Traders sell stocks and avoid carry trades when concerned financial market turmoil will increase.
The Standard & Poor's 500 Index lost 2.7 percent last week, putting the measure 15 percent below its October record high.