NZ dollar holds near 2 1/2 year low as Turkish fears remained contained
By Paul McBeth
Aug. 14 (BusinessDesk) - The New Zealand dollar held near a two-and-a-half year low as investors remained nervous about
Turkey's financial crisis, which has weighed on other emerging markets but has yet to spread to Europe's banking system.
The kiwi was unchanged at 65.72 US cents as at 8am in Wellington from the local close yesterday. The trade-weighted
index was at 71.51 from 71.47 yesterday.
Stocks on Wall Street fell and currencies of emerging market nations including South Africa's rand and Argentina's peso
weakened as global investors remain fixated on efforts by Turkish authorities to stabilise its financial woes, where
inflation is running at 16 percent and president Recep Tayyip Erdogan doesn't want higher interest rates. Turkey's
central bank cut bank reserve requirements, boosting liquidity for lenders, but the lira has weakened a further 8.3
percent to 6.9609 per US dollar.
"Turkey remains in the headlines after more volatility in the lira over the past 24 hours, but there has been limited
contagion so far outside of other emerging market markets," Bank of New Zealand interest rate strategist Nick Smyth said
in a note. "The NZD fell to a low of 0.6557 at the start of the trading day, but it has mostly been trading sideways,
within a narrow range since that point."
The local currency was already under pressure at the start of this week after the Reserve Bank pushed out a projected
interest rate hike by another year and kept the door open for the official cash rate to be lowered as governor Adrian
Orr focuses on sluggish domestic growth. The kiwi's slump to its lowest level since March 2016 attracted buying from
exporters keen on locking in the low rate.
No local data is scheduled for today, although investors will be watching an Australian consumer confidence survey and
Chinese retail sales and industrial production data.
The kiwi traded at 90.42 Australian cents from 90.55 cents yesterday and increased to 4.5268 Chinese yuan from 4.5200
yuan. It fell to 57.64 euro cents from 57.81 cents yesterday and was almost unchanged at 51.50 British pence from 51.53
pence. The local currency rose to 72.72 yen from 72.40 yen yesterday.
(BusinessDesk)
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