Syrian tensions impact on kiwi dollar

MIDDLE East tensions have ramped up market risk aversion, sapping demand for the kiwi dollar.

THE New Zealand dollar has extended its decline as the growing likelihood of a Western military strike on Syria erodes investors' appetite for higher yielding, or riskier, assets.

The kiwi dollar fell to 77.67 US cents at 5pm in Wellington from 77.98 cents at 8am and 78.13 cents on Tuesday.

The trade-weighted index fell to a two-month low 73.08, moving to 73.33 at 5pm from 73.79 on Tuesday.

The US, UK and France look increasingly likely to approve a military strike on Syria in retaliation to the regime's presumed use of chemical weapons on civilians.

That's spooked financial markets around the world, and Asian stocks followed US and European bourses lower.

"It's all about Syria and the impending missile strike - that's what's really driving the market," said Michael Johnston, senior dealer at HiFX in Auckland.

"There's a big uptick in risk aversion" which has sapped demand for the local currency, he said.

The NZ currency dropped to 75.33 yen from 76.76 yen on Tuesday, was little changed at 87.07 Australian cents from 87.03 cents and declined to 58.03 euro cents from 58.41 cents.