NZ dollar edges higher as investors eye latest Greek creditor meeting

Monday 22nd June 2015

The New Zealand dollar edged up in local trading, following the euro higher ahead of the next emergency meeting between Greece and its European creditors, who are trying to prevent the Mediterranean nation from defaulting on a month-end debt payment.

The kiwi increased to 69.15 US cents at 5pm in Wellington from 68.97 cents at 8am and 69.08 cents on Friday in New York. The local currency slipped to 60.66 euro cents from 60.84 cents at the New York close.

The euro rallied on optimism Greece and its creditors may reach a compromise after Prime Minister Alex Tsipras briefed German Chancellor Angela Merkel, French President Francois Hollande and European Union president Jean-Claude Juncker on a proposal to release bailout funds. Greece has until the end of the month to come up with an acceptable offer before defaulting on a 1.6 billion euros loan from the International Monetary Fund.

"The markets are thinking we might get something out of this Greek meeting," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "We've had some massive moves (in the kiwi) this month and I think we're due a lull."

A BusinessDesk survey of 13 currency analysts today predicted the kiwi will trade between 68 US cents and 71.20 cents this week. Six bet the currency will gain, four said it may remain relatively unchanged and three picked it to fall.

The local currency has come off the boil amid growing expectations for lower interest rates, which the Reserve Bank confirmed with a cut at its June 11 meeting. Governor Graeme Wheeler said falling dairy prices had overseen a deterioration in the terms of trade, which hadn't been translated into a weaker currency.

At his weekly post-Cabinet press conference, Prime Minister John Key today said Wheeler was doing a good job and that it was very difficult to meet the central bank's inflation target for the mid-point of the 1 percent-to-3 percent band.

Government figures today showed New Zealand's annual net migration accelerated to 57,800 in the year ended May 31, nearing the 60,000 peak estimated in the Treasury's upside forecast scenario in last month's Budget.

New Zealand's two-year swap rate fell to 3.0225 percent at 5pm in Wellington from 3.06 percent last week, and the 10-year swap rate declined to 3.835 percent from 3.87 percent.

The local currency was little changed at 88.86 Australian cents at 5pm in Wellington from 88.87 cents at the New York close, and gained to 4.2938 Chinese yuan from 4.2888 yuan. It traded at 84.86 yen from 84.73 yen last week, and was almost unchanged at 43.47 British pence from 43.48 pence.

The trade-weighted index was at 71.79 at 5pm in Wellington from 71.83 last week.

BusinessDesk.co.nz

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