NZ dollar touches fresh high vs euro amid concerns about Greece

Friday 17th April 2015

The New Zealand dollar touched a fresh record high against the euro amid mounting concerns that Greece may exit the common currency as it fails to make progress in reaching agreement on its debt repayments.

The kiwi touched 71.53 euro cents and was trading at 71.15 cents at 8am in Wellington, from 71.01 cents at 5pm yesterday. The local currency reached a three month high of 76.97 US cents and was recently trading at 76.64 cents from 75.94 cents yesterday as traders pushed out expectations for a US rate hike following a slew of weaker economic data.

Greek bond yields soared yesterday after the Financial Times reported that the International Monetary Fund earlier this month had rebuffed an informal approach by Greece to delay pending loan repayments. European officials such as IMF chief economist Olivier Blanchard are highlighting the possibility of a Greek exit from the Eurozone, saying this week that for the rest of the Eurozone a Greek exit "would not be smooth sailing, but it could probably be done", the FT reported. Investors are shunning the euro amid concerns other countries in the region could follow Greece.

"The euro unfortunately still looks very much on the back foot and the kiwi doesn't really want to go down, the only currency we occasionally go down against is the US dollar when the US dollar is having a rally," said Kevin Morgan, senior dealer, foreign exchange and derivatives at OMF. "The US dollar has been on the back foot for the last 48 hours so kiwi is relatively strong against the backdrop of a weak euro and hence this kiwi/euro looks like it is going to stay elevated for some time."

Tonight, traders will be focused on inflation data for the US and the Eurozone, and US consumer confidence. European Central Bank president Mario Draghi is scheduled speak during the weekend following IMF meetings in Washington

The New Zealand dollar advanced to 98.32 Australian cents from 97.81 cents yesterday, gained to 51.29 British pence from 51.17 pence, and rose to 91.22 yen from 90.58 yen. The trade-weighted index touched a high of 80.08, its highest level since July last year. The trade-weighted index was recently at 79.86 from 79.34 yesterday

BusinessDesk.co.nz

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