Monday 20th February 2012
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The New Zealand dollar rose on optimism European finance ministers will approve a second bail out for Greece boosting demand for higher- yielding assets.
The New Zealand dollar was trading at 83.84 US cents just after 8am in Wellington, up from 83.36 US cents in New York on Friday. The trade-weighted index increased to 73.91 from 73.53.
Investors are hopeful European finance ministers will approve Greece’s $130 billion bailout package at a meeting in Brussels on Feb.20. Italian Prime Minster Mario Monti, German Chancellor Angela Merkel and Greek Prime Minister Lucas Papademos have all expressed optimism that an agreement on Greece can be reached.
Euro-area finance ministers have slated the meeting as a make-or-break effort to solve the Mediterranean nation’s fiscal crisis after leaders last week said Greece wasn’t doing enough to combat the crisis.
“Investors are on tender hooks until we have an announcement out of Greece,” said Mike Jones, market strategists at Bank New Zealand. “If there is an agreement the kiwi will push higher.”
The European Central Bank has swapped its Greek bonds for new ones, Bloomberg reported. German newspaper Die Welt last week reported the ECB would swap 50 billion-euro Greek government bond holdings for new Greek bonds to plug the financing gap in the second bailout program for the Mediterranean nation.
In New Zealand, the government accounts for the first six months of the year are set for release this morning along with, the Producers Price Index and Capital Goods Price Index for the December.
The New Zealand dollar was little-changed on 52.92 British pence from 52.61 pence on Friday at 5pm. The kiwi dollar fell to 63.64 euro cents from 63.24 cents and was little changed at 77.79 Australian cents from 77.78 cents. It advanced to 66.8 yen from 66.29 yen.
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