Monday 17th May 2010 |
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The New Zealand dollar sank to near a four-week low amid ongoing concerns about Europe’s sovereign debt crisis after last week’s stabilisation fund and the earlier bail-out package for Greece failed to allay investors’ concerns about the region.
The euro fell 0.8% to 1.2340 per US dollar, a four-year low, as policy makers urged caution over the European Union’s and International Monetary Fund’s aid package amid tough austerity measures being introduced by the Euro-zone’s member nations. Investors’ fears were stoked by comments from European Central Bank council member Axel Weber that “dangers to financial stability that still exist,” while reports that French President Nicolas Sarkozy threatened to pull France out of the Euro-zone if Germany didn’t the EU package added to the gloom.
“The 110 billion euro bail-out package for Greece, then the 750 billion euro stabilisation package failed to stop the rot in euro and bodes quite ill for the area – there’s increasing market chatter that the euro could derail,” said Khoon Goh, senior markets economist at ANZ New Zealand. “The Euro-zone concerns finally hit home with the kiwi and the Aussie, which were dragged lower by the euro.”
The kiwi sank to 70.61 US cents from 71.14 cents on Friday in New York, and fell to 67.97 on the trade-weighted index of major trading partners’ currencies from 68.19. It dropped to 65.15 yen from 65.64 yen last week, and was little changed at 79.79 Australian cents from 79.74 cents. It edged up to 57.21 euro cents from 57.16 cents on Friday, and slipped to 48.61 pence from a post-float high 49.02 pence.
Goh said the currency may trade between 70.42 U.S. cents and 71.04 cents today, with Europe the continuing influence on its fortunes.
With the euro under increasing pressure, it could push to 60 euro cents, he said.
US data continued to show the world’s largest economy is recovering, with April retail sales and industrial production beating expectations.
The Dollar Index, which measures the greenback against a basket of six major currencies, hit a new 12-month high at 86.27 as investors continued their flight to so-called safe havens.
Businesswire.co.nz
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