Sharechat Logo

NZ dollar falls

Thursday 29th December 2011

Text too small?

Italy's success at a debt auction today failed to stem concern about the hurdles ahead for the fiscally challenged country that needs to raise about 450 billion euros next year, highlighting the substantial challenges facing the euro zone area.

Underpinning those worries was a report that said the European Central Bank’s balance sheet climbed to a record after it lent financial institutions more money last week.

The New Zealand dollar fell against the greenback and the yen after the European Central Bank’s balance sheet grew to a record, underlining the scale of its efforts to support credit in the region and sapping investor appetite for risk.

The kiwi dollar declined to 76.92 US cents from 77.42 cents in late trading yesterday and fell to 59.93 yen from 60.23 yen.

The ECB’s balance sheet has grown to a record 2.73 trillion euros as it lent to banks, though lenders themselves have little appetite for extending credit. ECB data shows banks in the euro zone deposited a record 452 billion euros with the central bank, typically something they do with surplus funds, Reuters reported. The ECB figures offset optimism from Italy’s successful sale of short-term debt, though that nation faces a bigger test with the sale of 10-year bonds on Thursday.

The euro “dragged most risk currencies lower in sympathy” including the kiwi dollar, said Mike Jones, market strategist at Bank of New Zealand. The ECB balance sheet showed “the sheer amount of lending to banks” and raised fears about the strength of Europe’s financial system, he said.

The New Zealand dollar may trade in a range of 76.50 US cents to 77.85 cents today, Jones said. Trading volumes were light in the Christmas-New Year hiatus, when forex trading desks are typically operating with skeleton staff.

Italy is preparing to sell bonds ranging from 2014 to 2022 on Thursday and investors are speculating it may struggle to get them away at a yield of less than 7 percent – a level seen as unsustainable in terms of interest payments. Italy’s 10-year bonds traded at that level yesterday.

Stocks fell in the US, in another sign investors are eschewing risk, as they ponder the challenges faced by the world’s biggest economy into 2012. The Dow Jones Industrial Average declined 1 percent, while Europe’s FTSEEurofirst 300 Index fell 0.7percent.

The kiwi dollar slipped to 76.13 Australian cents from 76.22 cents yesterday and climbed to 49.73 British pence from 49.44 pence. It rose to 59.40 euro cents from 59.23 cents as Europe’s common currency fell to a year-low against the greenback and a 10-year low versus the yen.

The trade-weighted index was at 69.01 from 69.11.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
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:

New Zealand Rural Land Company Limited (NZX: NZL) Agreement to acquire large scale dairy asset portfolio
EROAD Limited (NZX: ERD) launches Clarity Solo Dashcam
22nd October 2021 Morning Report
Pictor ready to roll out game-changing COVID antibody test in New Zealand
Scott Technology Limited (NZX: SCT) Announces FY21 Results
21st October 2021 Morning Report
Greenfern Industries Limited (NZX: GFI) L&Q Notice
TruScreen Group Limited (NZX: TRU) Clinical Trial Results Highlight Efficacy of TRU Technology
20th October 2021 Morning Report
Freightways Limited (NZX: FRE) Acquisition of ProducePronto