Sharechat Logo

NZ dollar gains above 76 cents as downunder currencies seen as haven from Euro woes

Wednesday 30th November 2011

Text too small?

The New Zealand dollar rose to its highest level since Nov. 18 and the Australian dollar climbed back above US$1 on perceptions the currencies are a relative safe haven as Europe grapples with its debt woes.

The New Zealand dollar rose to 76.48 US cents overnight, sitting at 76.01 cents just before 8am, up from 75.49 cents at 5pm yesterday. The Australian dollar was recently at US$1.002, climbing above US$1 for the first time in 1 ½ weeks.

Australia credit rating was lifted to AAA by Fitch ratings yesterday, the highest possible level, while the federal government announced A$6.8 billion of spending cuts to deliver a budget surplus by the middle of 2013. The Reserve Bank of Australia’s benchmark interest rate is 4.5 percent while New Zealand’s is 2.5 percent, compared to near zero in the US.

Australia’s credit rating upgrade “will help create positive perceptions” of the two nations, said Michael Hollows, currency strategist at HiFX. “The kiwi and the Aussie are seen as safe haven flows as people look for places to park their money,” he said.

Investors took heart from developments in Europe yesterday, when finance minister agreed to release an 8 billion euro aid payment to Greece, part of the 110 billion euro package of support agreed with Athens last year. The joint IMF/EU payment is the sixth installment of loans to help Greece finance itself since being cut off from financial markets.

Italy sold 3.5 billion euros of bonds, showing investors are still willing to lend to the indebted nation, though it had to pay a record 7.89 percent interest on the three year bonds, Reuters reported.

While there are signs of progress in Europe, investors are yet to see any meaningful answers to the problems, Hollows said.

In New Zealand, building consents data for October is due out today, which will provide an update on the nation’s tepid housing market.

The kiwi fell to 75.97 Australian cents from 76.07 cents yesterday. It rose to 75.18 euro cents from 56.62 cents yesterday, and was at 48.81 British pence from 48.72 British pence and 59.31 yen from 58.97 yesterday.

The trade weighted index rose to 76.18 from 75.49.

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:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington