Kiwi falls against stronger euro

Tuesday 1st February 2011

The New Zealand dollar fell against a broadly stronger euro, which gained after a jump in euro zone inflation.

By 8am the kiwi was down to 0.5648 euro from 0.5671 at 5pm yesterday, and was slightly stronger against the greenback at US77.22c.

BNZ strategist Kymberly Martin said the NZ dollar had fallen below US76.90c early in the night, before recovering gradually.

It had been battered on two fronts.

First, a continuation of uncertainty surrounding the political situation in Egypt likely weighed on the NZ dollar, with the second reason being the stronger than expected euro zone inflation raising the possibility of earlier than previously expected interest rate hikes in the region.

The kiwi also fell to A77.50c at 8am against the Australian dollar from A77.71c at 5pm, while edging up to 63.40 yen from 63.28. The trade weighted index was down to 68.75 at 8am from 68.91.

Reuters reported that the euro was headed for its second monthly advance against the US dollar, and more gains could be in store after the jump in euro zone inflation.

Asian central banks and some Middle East accounts were among the most active euro buyers, traders said. Some said the euro could renew a march toward US$1.40 in the weeks ahead, provided trouble in Egypt did not spread to other countries.

The euro rose to around US$1.3740 on trading platform EBS.

NZPA

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