NZ dollar declines after Belgium terrorist attacks prompt flight to safety

Wednesday 23rd March 2016

The New Zealand dollar fell after terrorist attacks in Brussels prompted investors to seek so-called safe haven assets such as bonds and gold and eschew higher risk bets such as the kiwi.

The local currency dropped to 67.38 US cents at 8am in Wellington, from 67.68 cents at 5pm yesterday. The trade-weighted index slid to 71.56 from 71.85 yesterday.

Terrorist bombings in Brussels, the official seat of the European Parliament and the unofficial capital of the European Union, killed at least 34 people and weighed on investor sentiment for higher risk assets. The Chicago Board Options Exchange Volatility Index, or VIX which is known as Wall Street’s fear gauge, initially jumped higher then returned to its previous level after US data showed evidence of a tentative stabilisation in manufacturing.

"Markets were focused on the tragic Brussels terrorists attack overnight, which triggered modest safe-haven flows for the first half of the session," ANZ Bank New Zealand agri economist Con Williams and senior foreign exchange strategist Sam Tuck said in a note. "As the session progressed, some of the initial moves were unwound as a raft of data supported the view global economic activity and sentiment had based,"

The main focus locally today will be Fonterra Cooperative Group’s half-year earnings and updates on any support initiatives to help farmers, ANZ said.

ANZ expects the kiwi to trade between 66.60 US cents and 68.10 cents today.

The New Zealand dollar fell to 88.49 Australian cents from 89.15 cents yesterday, and to 4.3733 yuan from 4.3931 yuan. It gained to 47.44 British pence from 47.07 pence on concern Britain may be more likely to vote to leave the EU.

The kiwi was little changed at 60.07 euro cents from 60.10 cents yesterday, and at 75.70 yen from 75.69 yen.

BusinessDesk.co.nz

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