NZ dollar falls as Europeans struggle in Greek debt talks, stock markets falter
By Paul McBeth
Nov. 27 (BusinessDesk) - The New Zealand dollar fell after stock markets faltered on news European finance chiefs were
still at loggerheads over granting Greece its next round of bailout cash.
The kiwi fell to 82.14 US cents at 8.30am in Wellington from 82.40 cents yesterday. The trade-weighted index declined to
73.50 from 73.73.
Stocks on Wall Street and in Europe fell, with the Standard & Poor's 500 Index down 0.5 percent and France's CAC 30 falling 0.8 percent, as euro-zone finance ministers failed to cut
a deal giving Greece its next tranche of an emergency loan.
The major sticking point appears to be whether the official sector, including the European Central Bank, will have to
take a haircut on their Greek bond holdings. Earlier this year, the heavily indebted Mediterranean nation secured a 130
billion euro bailout to stave off default in exchange for harsh budget cuts.
"Markets are playing the waiting game still on Greece and investors' patience is starting to wear thin," said Mike
Jones, currency strategist at Bank of New Zealand in Wellington. "Without any concrete agreement over Greece, it's
clearly negative for market sentiment and currencies."
Markets are also waiting on the outcome of talks in the US between the Democrat-controlled White House and
Republican-dominated House of Representatives to resolve the US$607 billion fiscal cliff of automatic tax hikes and
spending cuts which kick in on Jan. 1.
"It looks like that story will drag on through December and into January and the markets are readjusting earlier
optimistic view on that," Jones said.
Local trade figures are expected to show New Zealand's imports outweighed exports by $536 million in October, according
to a Reuters survey of economists. If the deficit is smaller than expected, that could stoke demand for the kiwi dollar.
The Reserve Bank's survey of inflation expectations is also scheduled for release today, and will likely show New
Zealand financial institutions pared back their outlook for price increases after a consumer price index in the third
quarter.
The kiwi fell to 63.37 euro cents from 63.57 cents yesterday, and declined to 51.29 British pence from 51.42 pence. It
dropped to 78.55 Australian cents from 78.74 cents yesterday, and sank to 67.49 yen from 67.77 yen.
(BusinessDesk)