Greece's fiscal woes impact dollar

Monday 1st February 2010

The New Zealand dollar fell closer to 70 U. cents as Greece’s ongoing fiscal woes sapped investors’ appetite for higher yields and encouraged them to park their cash in so-called safe havens such as the greenback.

Greece’s sovereign credit concerns weighed on the market after European Union Monetary Affairs Commissioner Joaquin Alumnia said a bail-out for the Mediterranean nation was impossible.

The fears about Europe took the gloss off investor sentiment after it had earlier been underpinned by a very strong pick-up in fourth-quarter US gross domestic product. The world’s largest economy grew an annual 5.7% in the three months ended December 31, the fastest pace in six years, and ahead of the 4.8% forecast.

“Greece’s fiscal woes and general European credit concerns saw safe havens supported – the firmer US dollar saw growth sensitive currencies slip,” said Mike Jones, strategist at Bank of New Zealand. “The kiwi performed quite well, in a relative sense, with the TWI pretty much unchanged” over the course of the week, he said referring to the Trade Weighted Index.

The kiwi dropped to 70.03 US cents from 70.82 cents last week, and slipped to 64.65 on the TWI from 64.97. It dropped to 62.91 yen from 63.89 yen on Friday in New York, and gained to 79.41 Australian cents from 79.08 cents. It decreased to 50.55 euro cents from 50.66 cents last week, and edged up to 43.92 pence from 43.78 pence.

Jones said the currency may trade between 69.70 US cents and 70.70 cents as investors remain subdued over the state of the Euro-zone economy.

Trading in New Zealand may be thin today, with Auckland celebrating a public holiday.

Businesswire.co.nz

Comments from our readers

No comments yet