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NZ dollar gains against euro

Thursday 12th January 2012

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The New Zealand dollar was the biggest gainer among the world’s 10 most-traded currencies and set a new high against the euro as the Germany economy shrank and Fitch Ratings urged the European Central Bank to do more to tackle the region’s debt woes.

The New Zealand dollar recently traded at 62.60 euro cents and earlier reached 62.67 cents, the highest since the common currency was released in 2002, up from 62.24 cents at 5pm yesterday. The kiwi rose to 79.57 US cents from 79.31 cents.

The Germany economy shrank 0.25 percent in the fourth quarter from the third, after growing 3 percent last year, according to the Federal Statistics Office in Wiesbaden. The European Union also lowered euro-area growth to 0.1 percent in the third quarter, from a 0.2 percent estimated earlier, stoking investor concerns the crisis will worsen.

“The New Zealand dollar remains relatively attractive,” said Alex Sinton, senior deal at ANZ New Zealand. “You can’t bank on the exchange rate moving a certain way – but around this time of year we do tend to have a kick up in the kiwi.”  

Fitch urged the European Central Bank to boost bond purchases to combat the debt crisis to help prevent the collapse of the shared currency. The ECB is expected to keep its key interest rate at 1 percent at a policy meeting tomorrow, according to the median estimate of 53 economists’ survey by Bloomberg.

A Reuters poll of economists forecast the worst is yet to come in the euro zone's debt crisis, though they expect the currency union to survive 2012 intact. Nine out of the poll's 64 economists said the bloc had turned the corner on a sovereign debt crisis, only 10 said the euro zone would not survive the year in its current form. The rest were reasonably confident it would.

A string of upbeat US data underpinned the US dollar’s strength, the Federal Reserve’s so-called Beige Book, a report on regional economic conditions, improved across all regions in the final six weeks of 2011, boosted by strong holiday sales and employment figures, housing remains stagnant.

In New Zealand, the ANZ Commodity Price Index is set for release at 1pm, providing an update of prices for the nation’s exports of raw materials.

The kiwi was up at 77.20 Australian cents from 77.09 cents yesterday, it traded at 51.91 British pence from 51.30 pence and 61.14 yen from 60.90 yen.

The trade-weighted index rose to 71.34 from 71.04.

(BusinessDesk)

BusinessDesk.co.nz



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