Kiwi exchange rates slip little against trading partners

Tuesday 10th May 2011

The New Zealand dollar spiked to a three-week high against the euro - helped by further exposure of problems in the euro zone's heavily indebted economies - but generally slipped a little in exchange rates against currencies of other key trading partners.

Standard and Poor's cut Greece's rating to B from BB-, dragging it further into junk territory on concerns a debt restructuring is increasingly likely, and another big ratings agency, Moody's, threatened to cut Athens' ratings by several notches.

Changes to Greece's debt structure are likely to prompt a call for more favourable terms from other nations who are struggling under heavy debt burdens and receiving financial aid, adding to fears about the euro zone economy.

At 8am today the NZ dollar was buying 0.5536 euro, having peaked around 0.5547 in the early hours of the morning after climbing from 0.5504 at 5pm yesterday, but by 5pm today it was back at 0.5531.

The kiwi also rose to US79.46c early today against the greenback, from US79.28c at 5pm yesterday.

But after the IMF said the currency was overvalued by as much as 20 percent, it fell to US79.12c at lunchtime, then bumped along until it had slid to US79.23 by 5pm today. The NZ dollar has been mostly falling from a high of more than US81c a week ago.

Currency strategist Mike Jones said that while the NZ dollar had been briefly dragged down, growth-sensitive currencies such as the kiwi would not stay down for long as risk appetite and global commodity prices staged a recovery.

The NZ dollar was buying A73.64c against the Australian dollar at 8am, and eased off to A73.58 at 5pm, near its close yesterday at A73.56.

Against the US dollar, the Aussie finished at US1.0771c, exactly the same as at 5pm on Monday, despite testing the 1.08 level twice during Asian trade, only to retreat.

Against the yen, the kiwi kept slipping, to 63.69 at 5pm, down from 63.84 at the same time yesterday.

The trade weighted index was 68.29 at 8am and fell to 68.18 at 5pm, very close to its level at the end of Monday.

NZPA

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