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NZ dollar hits new highs vs Euro, greenback after central bank meetings

Friday 6th July 2012

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The New Zealand dollar hit a record-high versus the euro and a multi-month high against the greenback after central banks in Europe, England and China eased borrowing costs on concerns about the global outlook.

The New Zealand dollar rose as high as 64.99 euro cents, the highest since the 17-nation currency entered circulation in 2002. It traded at 64.85 euro cents at 8am up from 64.01 cents yesterday at 5pm.

The kiwi climbed to a fresh two-month high 80.71 US cents, and traded at 80.35 cents at 8am up from 80.21 cents yesterday. Europe's shared currency weakened against higher-yielding peers including the kiwi after the European Central Bank cut its key interest rate by 25 basis points to a record-low 0.75 percent and reduced its deposit rate to zero for the first time.

China unexpectedly cut its key interest rate for the second time in a month and the Bank of England raised its asset-purchase target by 50 billion pounds to 375 billion pounds. "All of this is good stuff for the kiwi against the euro which has well and truly smashed up to a new high," said Dan Bell, currency strategist at HiFX.

"The New Zealand dollar will continue to rise against the euro and the pound - whilst we are not firing up all cylinders we are outperforming most developed countries." "Investors' are feeling happier about holding onto New Zealand dollars," Bell said. The New Zealand dollar increased to 51.73 British pence from 51.43 pence.

Traders will be looking at US employment data on Friday when non-farm payrolls are expected to show the world's biggest economy added 90,000 jobs last month, according to a Reuters survey. In New Zealand, the government financial statements for the 11 months ended May 31 are due for release this morning. The New Zealand dollar rose to 64.17 yen at 8am from 64.02 yen at 5pm yesterday. The trade weighted index increased to 72.80 from 72.51 yesterday.

BusinessDesk.co.nz

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