Kiwi rises against euro

Tuesday 10th May 2011

The New Zealand dollar rose to a three-week high against the euro, as problems with the euro zone's heavily indebted economies were in the spotlight.

Standard and Poor's cut Greece's rating to B from BB-, dragging it further into junk territory on concerns a debt restructuring is increasingly likely. Moody's threatened to cut Athens' ratings by several notches.

Any changes to Greece's debt structure are likely to prompt a call for more favourable terms from other nations who are struggling under heavy debt burdens and receiving financial aid, adding to fears about the euro zone economy.

At 8am today the NZ dollar was buying 0.5536 euro, having peaked around 0.5547 after climbing from 0.5504 at 5pm yesterday. The kiwi also rose to US79.46c against the greenback, from US79.28c.

BNZ currency strategist Mike Jones said the NZ dollar spent much of the overnight session trailing gyrations in the euro.

While the NZ dollar was briefly dragged below US79c in sympathy, growth-sensitive currencies such as the kiwi did not stay down for long as risk appetite and global commodity prices staged a recovery from last week's rout.

The NZ dollar was buying A73.64c against the Australian dollar at 8am, little changed from its 5pm level, while the kiwi edged lower to 63.72 yen. The trade weighted index was 68.29 at 8am from 68.16 at 5pm.

NZPA

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