Sharechat Logo

NZ dollar falls on S&P move and Euro debt

Tuesday 23rd November 2010

Text too small?

The New Zealand dollar fell near 77 US cents after Standard & Poor's put the nation's foreign currency credit rating on a negative outlook over ongoing offshore indebtedness.

S&P put New Zealand's AA+/A-1+ rating on a negative outlook, giving it a one-in-three chance of a downgrade over the next two years, saying it reflected the forecast widening in the country's external imbalances. The government has been under growing pressure after its tax take in the three months ended September 30 was $1.1 billion below forecast amid the $1.6 billion bail-out of Timaru lender South Canterbury Finance and the 7.1 magnitude Canterbury earthquake. International investors were still wary of Europe's sovereign debt woes yesterday as the Irish bail-out paves the way for tougher austerity measures for the ailing "Celtic Tiger".

"New Zealand's fiscal position is, relatively speaking, better than a lot of other countries - having to absorb those two shocks limits the flexibility to cope with any other unexpected future shocks," said Khoon Goh, head of market economics and strategy at ANZ New Zealand. "S&P is going to continue to weigh on the kiwi from here on."

The kiwi fell to 77.09 US cents from 77.34 cents yesterday, and edged up to 69.12 on the trade-weighted index of major trading partners’ currencies from 68.96. It gained to 65.17 yen from 64.50 yen yesterday, and rose to 78.27 Australian cents from 77.87 cents. It advanced to 56.70 euro cents from 56.25 cents yesterday, and was little changed at 48.37 pence from 48.28 pence.

Goh said the currency may trade between 76.85 US cents and 77.40 cents today as it continues to follow global sentiment in the wake of the S&P announcement.

The Reserve Bank of New Zealand's survey of economists' expectations for inflation and other major economic indicators comes out today, though it isn't expected to vary too much from last quarter's 2.6% forecast for the consumer price index in two years time.

The Irish Green Party, the junior partner in the government coalition, called for an early election after Prime Minister Brian Cowen confirmed it will ask the International Monetary Fund and European Union for as much as 100 billion euros to bail out its banks and shore up its books. Cowen said he plans to dissolve after its 2011 budget for an early election.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

VCT - Operational performance for the year ended 30 June 2024
Challenge to banks the way to go
Bigger returns or lower risk?
NPH - Director Appointment
July 19th Morning Report
Wellington International Airport Ltd (“WIA040”) - Maturity
Devon Funds Morning Note - 18 July 2024
CNU - Commerce Commission releases draft Price Quality decision
Precinct FY24 Annual Results and Webcast Details
Scott Technology appoints new CEO