NZ dollar holds at record vs. euro

Wednesday 11th January 2012

The New Zealand dollar held its decade-high against the euro and rose versus the greenback as pressure grows to help Greece avoid default and as gains in equity markets stoked investors’ risk appetite.

The New Zealand dollar traded at 62.04 euro cents just before 8am after climbing as high as 62.25 cents, from 62.10 cents at 5pm yesterday. The kiwi was little changed on 79.35 US cents, having earlier climbed above 79.50 cents for the first time in two months.

German chancellor Angela Merkel said Greece would be the focus of talks at a meeting with International Monetary Fund director Christine Lagarde in Berlin today. Under a plan hammered out by euro zone leaders in October, investors in Greek bonds would have to accept a 50 percent cut in the value of their holdings.

“The situation with Greece is by far the trickiest thing now,” said Stuart Ive, currency strategist at HIFX. “If there is a deterioration of the situation I think we will see a harsh and short-term fall in risk with the kiwi being sold heavily.”

Helping lift the kiwi dollar, stocks rose in Europe and the US after aluminium producer Alcoa gave a more upbeat assessment of its outlook after posting a quarterly loss. Alcoa’s results typically herald in the US earnings season and the outlook statement lifted optimism about corporate profits.

The European Central Bank will meet on tomorrow to decide whether or not to cut interest rates. The meeting is heavily anticipated by investors who will be waiting to see the bank’s view on Europe’s current situation, Ive said. There is no New Zealand data set for release today.

The kiwi fell to 76.84 Australian cents from 77.03 cents yesterday, and 51.21 British pence from 51.26 pence. It was little changed on 60.9 yen. The trade-weighted index slipped to 70.92 from 70.97.

(BusinessDesk)

BusinessDesk.co.nz

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