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NZ dollar keeps strength against euro

Monday 10th January 2011

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The New Zealand dollar inched to a fresh five-year high against the euro today ahead of monthly trade data, as concern persisted about the European debt crisis.

After hitting 0.59 euro on Saturday morning, its highest level against the European currency since December 2005, the kiwi traded at 0.5904 mid-morning today.

By 5pm, the NZ dollar was at 0.5901 euro, up from 0.5834 at 5pm on Friday.

The euro hit its lowest level against the US dollar in nearly four months as investors braced for upcoming bond sales from the more debt-stricken euro zone countries, and looked set to sink further.

"Currency markets are likely to remain fixated on the problems in Europe's high-debt economies," ASB Bank economists said.

"Governments in Portugal, Spain and Italy are attempting to sell bonds this week, and the euro is likely to remain under downward pressure against other currencies including the NZD."

The European Central Bank is expected to announce no change to interest rates on Thursday.

Buoying an already well-bid NZ dollar was a significant improvement in New Zealand's trade deficit for November, and the first annual trade surplus for November since 2001.

Higher prices for dairy products were the main factor behind a 19% rise in the value of exports in November compared with a year earlier. The trade deficit for November was $186 million, or 5.1% of exports, compared with an average November deficit of 24% of exports for the previous five years.

The NZ dollar rose to US76.13c by 5pm today, from US75.90c at 8am which was also similar to Friday's level.

The kiwi was at A76.44c, up a touch from A76.34c on Friday, steady against the yen and slightly weaker against sterling. The trade weighted index rose to 69.14, from 68.82 on Friday.

Key domestic data tomorrow includes the New Zealand Institute of Economic Research's quarterly business opinion survey.

 

NZPA



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