NZ dollar falls as speculation for Spanish bailout mounts

NZ dollar falls as speculation for Spanish bailout mounts, Australian economy stumbles

By Paul McBeth

Sept. 26 (BusinessDesk) - The New Zealand dollar fell as investors' appetite for higher-yields was sapped amid growing speculation Spain will formally ask for a rescue package, and as Australia's economy comes under pressure with high-profile corporate failures.

The kiwi fell to 81.94 US cents at 5pm in Wellington from 82.09 cents at 8am and 82.29 cents yesterday. The trade-weighted index decreased to 72.94 from 73.03.

Stocks across Asia fell amid heightened fears among investors that Spain may formally seek a bail-out after Spanish province Catalonia called a snap-election in a bid for greater self-determination. Japan's Nikkei 225 index fell 1.9 percent in afternoon trading, while Australia's S&P/ASX 200 index edged down 0.2 percent, and Hong Kong's Hang Seng index declined 0.9 percent.

The trans-Tasman currencies were also hit by growing fears about Australia's economy after Tasmanian forestry group Gunns yesterday called in voluntary administrators, putting 600 jobs at risk, and as broadcaster Nine Entertainment teeters on collapse.

New Zealand government figures showed a bigger trade deficit than expected of $789 million in August, with a 19 percent slide in exports to Australia, the country's biggest trading partner.

"There are big job losses happening in Australia … the whole country is struggling a bit," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "The kiwi is still going to be directed by what's happening offshore."

Kelleher said the currency may trade between 81.50 US cents and 82.50 cents.

Fonterra Cooperative Group, New Zealand's biggest company, reported a 19 percent fall in its annual payout to $6.40, with a farmgate milk price of $6.08 per kilogram of milk solids and a 32 cents per share dividend. That was short of the forecast range between $6.45 and $6.55.

The New Zealand dollar was little changed at 63.65 euro cents from 63.60 cents and largely unchanged on 50.69 British pence from 50.72 pence. The kiwi rose to 79.09 Australian cents from 78.89 cents, and fell to 63.70 yen from 64 yen.

(BusinessDesk)

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