NZ dollar holds loss as Ukraine tension stokes risk aversion
By Paul McBeth
March 3 (BusinessDesk) - The New Zealand dollar held its loss in local trading as heightening tensions in Ukraine
weighed on investors’ appetite for higher-yielding assets.
The kiwi traded at 83.53 US cents at 5pm in Wellington from 83.54 cents at 8am, down from 84.21 cents on Friday in New
York. The trade-weighted index fell to 78.40 from 78.65 at the New York close.
Stocks across Asia fell as investors sold down risk-sensitive assets as political leaders condemned steps by Russia to
take control of the Crimean peninsula in Ukraine. The Group of Eight leading economies have suspended preparations for
this June’s meeting in Sochi, Russia in protest over the moves, and US Secretary of State John Kerry is flying to Kiev,
Ukraine to affirm his country’s support for the Eastern European nation.
“The longer we don’t see a topside break in the risk currencies, the more chance of going lower – the Aussie is looking
very weak,” said Alex Hill, head of dealing at HiFX in Auckland. “We’ve had plenty of things like this that haven’t
moved currency too much, but it makes an excuse” to sell risk-sensitive currencies, he said.
A BusinessDesk survey of 11 traders and strategists predicts the kiwi will trade between 81.80 US cents and 85 cents
this week. Five expect the local currency to decline, three expect it to advance while three say it will likely be
little changed.
Traders are pricing in a 4 percent chance of a rate cut at tomorrow’s Reserve Bank of Australia policy review after
recent data showed the economy wasn’t recovering as quickly as anticipated. The kiwi traded at 93.70 Australian cents at
5pm in Wellington from 93.84 cents on Friday in New York.
That comes ahead of next week’s New Zealand central bank meeting, where governor Graeme Wheeler is expected to embark on
the first interest rate hike of a tightening cycle.
The local currency dropped to 84.68 yen at 5pm in Wellington from 85.28 yen at the New York close last week, and was
little changed at 60.62 euro cents from 60.71 cents. It slipped to 49.87 British pence from 50.04 pence last week.
(BusinessDesk)