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NZ dollar slips after G20 summit, Greek PM rumoured to go

Monday 7th November 2011

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The New Zealand dollar started the week a little weaker as investors reflect on the ongoing uncertainty about Greece’s leadership after nothing new came out of the Group of 20 leaders' summit.

The kiwi was at 79.15 US cents at 8am, down from 79.28 cents at 5pm on Friday.

As the New Zealand day got under way there was speculation that Greek Prime Minister George Papandreou was about to resign, while analysis of G20 meeting in Cannes at the weekend was more about what was not achieved than what was.

The G20 leaders said they stood ready to provide more resources to the International Monetary Fund, while US president Barack Obama was hopeful that Europe could solve its debt crisis. They agreed to accelerate a move towards market-driven exchange rates and mentioned China for the first time in this context.

"When you stand back it was interesting that they talked about the need for more market drive for exchange rates and singled out China for the first time," said Mike Burrowes, market strategist at Bank of New Zealand.

The summit was against the backdrop of growing unease the European Union’s rescues package for Greece and steps to shore up the region’s financial system may fail to eventuate.

Papandreou, the man who set off turmoil in world financial markets last week with a now dead promise of a referendum on Greece's bailout, is not expected to remain as prime minister for long.

Comments by Goldman Sachs fund manager Jim O'Neill to the Sunday Telegraph that the euro could split as Germany pushed for more fiscal unity painted a broader backdrop.

Meanwhile, a member of the European Central Bank was reported on Saturday as saying it frequently debated the option of ending its purchases of Italian bonds unless Rome delivers on reforms.

BNZ’s Burrowes said he expects markets to again be absorbed by developments in Europe this week. There is also Consumer Price Index data in China and a Bank of England rate decision this week.

The kiwi crept down to 76.34 Australian cents from 76.44 cents on Friday. It was at 57.46 euro cents from 57.42 cents last week, and fell to 49.14 British pence from 49.50 pence.

The kiwi was little changed at 61.86 yen from 61.82 yen on Friday.

The trade-weighted index rose to 69.45 from 69.32.

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