NZ dollar falls amid uncertainty over Greece bailout plan
Feb. 15 (BusinessWire) – The New Zealand dollar fell amid growing uncertainty over the European Union’s plan to bail out
Greece from its fiscal woes, which sapped investors’ appetite for riskier, higher-yielding, assets.
European officials warned there won’t be any more talk of economic assistance for Greece until there’s clear evidence of
spending cuts, creating uncertainty over whether the European Union will continue to let the debt-stricken Mediterranean
nation weigh on the region.
Euro-zone gross domestic product grew 0.1% in the fourth-quarter last year, below the expected 0.3% gain, and in stark
contrast to strong retail sales growth across the Atlantic. U.S. retail sales grew 0.5% last month, while consumer
sentiment dipped according to the University of Michigan consumer confidence survey.
“We’re still in a waiting game over the Greece situation – we’ll continue to see risk aversion while we wait for some
official comment on when the assistance will be provided,” said Mike Jones, strategist at Bank of New Zealand.
“The fundamentals under the kiwi are still pretty solid with the rally last week only suffering a temporary setback.”
The kiwi dollar dropped to 69.65 U.S. cents from 69.75 cents on Friday in New York, and edged down to 64.61 on the
trade-weighted index, or TWI, a measure of the currency against a basket of five trading partners, from 64.68.
It slipped to 62.71 yen from 62.89 yen on Friday, and declined to 78.36 Australian cents from 78.46 cents. It was little
changed at 51.14 euro cents from 51.18 cents last week, and inched up to 44.39 pence 44.38 pence.
Jones said the currency may trade between 69.10 U.S. cents and 70.30 cents today and will take its cues from offshore as
it waits on the Greek decision.
With the U.S. closed today for George Washington’s Birthday, and China celebrating its New Year, markets will likely be
relatively illiquid.
The People’s Bank of China helped damp investors’ appetite for risk after it raised the reserve requirement ration
another 50 basis points, its second hike this year, as it seeks to limit lending and keep a lid on inflation.
Local investors will be keeping an eye on equities today as New Zealand’s earnings season kicks on with Auckland
International Airport Ltd. and logistics company Freightways Ltd. reporting today.
After a murky 2009, people are looking for more guidance from some of the major companies after Telecom Corp. set a dull
tone to the season with soft earnings last week.
(BusinessWire)