NZ dollar drifts lower as Europeans ponder Greek bailout

Tuesday 16th March 2010

The New Zealand dollar drifted down against most major currencies overnight as German and French finance ministers poured cold water on a proposed $25 billion euro bailout for Greece.

After hovering around 70.50 US cents, currency traders displayed a subdued risk appetite and the Kiwi fell to 70 cents.

Investors were further unnerved overnight when ratings agency Moody’s released a report saying that the risks of the US and UK losing their AAA ratings have grown, though they remain safe for now.

The BNZ’s index of risk appetite (which has a scale of 0 – 100%) slipped to 68.3% from 70%, the highest it had been since May 2008 said its currency strategist Mike Jones.

Against this market uncertainty, investors trimmed positions in ‘growth-sensitive’ currencies like the Kiwi in favour of ‘safe-haven’ currencies like the Greenback.

The New Zealand dollar dropped to A76.66 cents from 76.88 cents against the Australian dollar, to Y63.48 from 63.81 against the yen, while the trade-weighted index fell to 64.77 from 64.89. It rose to 51.25 euro cents from 51.19 against the euro, and to 46.57 pence from 46.33 pence against the pound.

The market is waiting for Wednesday morning’s US Federal Open Market Committee announcement which will likely dictate near-term direction for the US dollar, as well as the possibility that the Bank of Japan may increase its asset purchase scheme to stave off deflationary pressures. If the BoJ fails to deliver, the yen could rise Mike Jones said.

Businesswire.co.nz

Comments from our readers

No comments yet