FOREX-Dollar index holds steady; kiwi falls on RBNZ comments
* Kiwi falls after RBNZ comments on overvalued currency
* RBNZ also says to impose home loan lending limit from Oct
* Near-term focus on Fed minutes due Wednesday
SINGAPORE, Aug 20 (Reuters) - The U.S. dollar held steady versus a basket of currencies on Tuesday, while the kiwi fell after New Zealand's central bank announced home lending restrictions and also said the New Zealand dollar was overvalued.
The U.S. dollar's moves versus the yen and the euro were limited as the market awaited the minutes of the U.S. Federal Reserve's July policy meeting due on Wednesday.
The kiwi dollar was the big mover, falling 1 percent to $0.7985.
The move lower followed home lending restrictions announced by New Zealand's central bank governor, Graeme Wheeler, to help cool off an overheated market without having to raise interest rates.
More importantly, markets reacted to a change in rhetoric, with the RBNZ describing the kiwi as overvalued, rather than high as it had in the recent past. Wheeler also said that while a rate rise might be needed next year, it wasn't needed now.
While the U.S. dollar gained ground against the New Zealand dollar, the greenback's performance versus the yen and euro were fairly subdued.
The dollar held steady against a basket of major currencies, with the dollar index last at 81.246, little changed on the day.
Investors are now looking ahead to minutes of the Federal Reserve's July meeting, awaiting fresh clues on whether the Fed will taper its bond-buying programme in September.
The dollar held steady versus the yen at 97.59 yen, while the euro edged up 0.1 percent to $1.3347.
Against the yen, the euro rose 0.1 percent to 130.25 yen , but remained below a two-week high of 131.05 yen set on Monday.
Recent weakness in U.S. and Japanese equities, due partly to market expectations that the Fed could start scaling back its monetary stimulus as early as next month, have helped support the yen, a traditional safe haven currency that tends to attract demand in times of market stress.
Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, said recent turmoil in emerging markets such as India, Brazil and Indonesia has also helped spur demand for the yen.
"The yen tends to attract buying when tensions in the market increase," he said.
Okagawa said demand for yen was also offsetting the dollar-positive impact from a recent rise in U.S. Treasury yields and capping the dollar's moves versus the Japanese currency.
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