Sharechat Logo

NZ dollar falls after IMF cuts global growth forecasts

Wednesday 10th October 2012

Text too small?

The New Zealand dollar followed equity markets lower after the International Monetary Fund cut its forecast for global growth, snapping demand for risk-sensitive currencies such as the kiwi.

The New Zealand dollar fell to 81.84 US cents at 8am in Wellington from 82.27 cents at 5pm yesterday. The trade weighted index decreased to 73.16 from 73.38 yesterday.

The IMF sounded an alarm over the global economic slowdown, cutting its 2012 and 2013 growth forecasts. The global economy will expand 3.3 percent this year and 3.6 percent in 2013, it said in its World Economic Outlook. That's down from its July forecast of 3.5 percent for 2012 and 3.9 percent in 2013.

Equity markets fell on both sides of the Atlantic. Wall Street's Standard and Poor's 500 Index shed 0.7 percent, while the Dow Jones Industrial Average dropped 0.6 percent. France's CAC 40 declined 0.7 percent.

"The global forecasts are probably correct and there is safe-haven buying on the back of it" helping push the New Zealand dollar lower, said Tim Kelleher, head of intuitional FX sales NZ at ASB Institutional.

The kiwi is likely to trade in a range between 81.50 US cents to 82 cents on the day as "off shore investors place more emphasis on it than the local market," Kelleher said.

The New Zealand dollar rose to 63.51 euro cents from 63.35 cents as a meeting between German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras failed to reassure investors that an agreement has been reached regarding the next tranche of Greece's bailout.

Merkel's visit came as the IMF forecasts predict Greece will miss the five-year debt reduction goal that underpins the nation's bailout.

Ministers from the wider European Union meet on Wednesday.

There is no significant New Zealand set for release today. The accommodation survey for August will be release on Thursday as well as the food price index for September from Statistics New Zealand. That's followed by the ANZ-Roy Morgan Consumer Confidence and Bank of New Zealand performance manufacturing index set for release on Thursday afternoon.

The New Zealand dollar fell to 80.10 Australian cents from 80.34 cents and decreased to 64 yen from 64.46 yen. The kiwi rose to 51.11 British pence from 50.74 pence.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington

IRG See IRG research reports