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NZ dollar holds near 5 1/2-mth low as G8 make little headway on Greece

Monday 21st May 2012

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The New Zealand dollar held near a five and half month low after leaders from the eight largest industrial economies pushed for Greece to stay in the euro, even as no concrete decisions were made to support the indebted nation.

The New Zealand dollar rose to 75.59 US cents at 8am from 75.47 cents at the close of trading in New York on Friday. It was down from 75.64 cents at the close of local trading on Friday. The trade weighted index decreased to 68.49 from 68.77 last week.

Greece was the main talking point at the weekend's Group of Eight nations conference in Washington DC. G8 leaders agreed on "the importance of a strong and cohesive euro-zone for global stability and recovery, and we affirm our interest in Greece remaining in the Eurozone while respecting its commitments.”

Still, there was little agreement between the nations, with divisions evident over the need for growth versus austerity. "There were certainly no fireworks coming out from the G8 - as per usual the comments haven't done anything concrete," said Stuart Ive, currency strategist at HiFX.

"As for the kiwi it yet again felt the risk aversion aspect - it has really been roughed up as the markets are on a downward turn." German Chancellor Angela Merkel continued her push for austerity, while US President Barack Obama allied with newly elected French leader Francois Hollande and his resistance to Germany's drive for balanced budgets and debt reduction.

The New Zealand dollar was little changed at 59.09 euro cents from 59.19 cents at the close of trading in New York on Friday. About half of investors surveyed by Bloomberg predict a Greek exit from the euro-zone this year as nation's political instability threatens to push the debt crisis to new depths.

The New Zealand dollar increased to 76.79 Australian cents from 76.65 cents at the close of trading in New York, and rose to 59.82 yen from 59.63 yen. The kiwi was largely unchanged at 47.78 British pence from 47.70 pence last week.

BusinessDesk.co.nz

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