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NZ dollar steadier after fall yesterday


Wednesday 13th July 2011

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The New Zealand dollar had a steadier night, after yesterday's decline against a range of currencies, as risk aversion eased and selling pressure related to the European debt crisis abated.

By 8am the kiwi was buying US81.83c, little changed from US81.95c at 5pm, while it slipped to 0.5853 euro from 0.5874.

ANZ said global markets had a choppy session overnight. The acknowledgement by European Union leaders of a potential default by Greece on its debt commitments initially weighed on markets before signs of progress at a meeting of policymakers helped provide support.

In reality, the challenges and solutions to the European peripheral debt crisis remained little changed over the past few weeks, ANZ said.

It was unclear how a second bailout package for Greece would be negotiated, as was the treatment of any potential default by a euro zone member, or how private sector participation in the bailout would be achieved.

Markets were cheered by minutes of the June meeting of Federal Reserve officials, with the minutes noting "the withdrawal of monetary accommodation may need to begin sooner than currently anticipated in financial markets". But the minutes showed officials divided on the course of action if the economy slowed.

The NZ dollar had suffered a bout of uncertainty yesterday and overnight as global markets readjusted further on European concerns. Dips overnight were met with appropriate levels of demand ensuring it lifted from the lows, ANZ said.

The NZ dollar was little changed overnight against the Australian dollar at A77.22c, after collapsing from around A78c early yesterday.

The kiwi fell to 65 yen at 8am from 65.70 at 5pm, and the trade weighted index dropped to 71.16 from 71.39.

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