NZ dollar gains vs euro as Spanish concerns resurface

Wednesday 19th September 2012

The New Zealand dollar rose against the euro as traders speculated on Spain's willingness to seek financial aid and ahead of current account figures for the second quarter that are expected to show a widening deficit.

The kiwi dollar rose to 63.39 euro cents from 63.16 cents at 5pm in Wellington yesterday. The local currency traded at 82.67 US cents, down from 82.79 cents.

Spain's Deputy Prime Minister Soraya Saenz de Santamaria said his government will consider seeking a bailout if the conditions are acceptable, signalling progress in one of the euro-zone's most-indebted nations. Meantime, Germany's ZEW Centre for European Economic Research showed the current conditions gauge fell to the lowest since June 2010.

Figures in New Zealand today are expected to show the current-account deficit widened to $1.64 billion in the second quarter, for an annual gap of $10.56 billion, or 5.2 percent of GDP.

Bank of New Zealand strategist Mike Jones said the kiwi may trade in a range of 82.35 US cents to 83 cents today though "support around 82.35 cents could be tested if the current account deficit figures prove about as nasty as we expect."

Helping provide support for the kiwi, prices rose 2.4 percent in the latest GlobalDairyTrade auction of dairy products, the fourth straight increase. Jones said drought in the US which has driven up grain prices should continue to underpin dairy prices.

The trade-weighted index rose to 73.34 from 73.27 yesterday. The kiwi dollar traded at 79.12 Australia cents, up from 79.08 cents.

The local currency was little changed at 50.90 British pence and rose to 65.15 yen from 65.09 yen.

BusinessDesk.co.nz

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