NZ dollar falls half a US cent amid growing Spanish debt concerns

Wednesday 11th April 2012

The New Zealand dollar fell more than half a cent against the greenback after equity markets on Wall Street and in Europe declined after renewed concerns about Spain’s growing public debt.

The New Zealand dollar fell as low as 81.24 US cents overnight from 82.01 cents yesterday at 5pm. The kiwi traded at 81.47 cents just before 8am.

Global risk sentiment weakened further amid renewed concerns more European sovereign rescues may be required as Spain struggles to contain its rising debt after the yield on Spanish and Italian government bonds rose.

The region’s Stoxx 600 Index fell 2.6 percent after it resumed trading after a four-day weekend, while Wall Street’s Dow Jones Industrial Average and the Standard & Poor’s 500 Index both dropped 1.5 percent in the lead-up to earnings season.

“Europe has talked for ages about implementation but at the moment they don’t the answers,” said Alex Sinton, senior dealer at ANZ New Zealand. “The New Zealand dollar probably led the way lower last night.”

The rising yields on Spanish and Italian bonds rose bolstered demand for the perceived safety of US government debt. The US Treasury sold US$32 billion of three-year notes, with the class of bidders that includes foreign central banks taking 40 percent of the debt, its largest share since August, according to Bloomberg News. The notes drew a yield of 0.427 percent.

The New Zealand Institute of Economic Research’s quarterly survey of business opinion is scheduled for release this morning, and is one of three key pieces of data the Reserve Bank uses in setting monetary policy.

The New Zealand dollar fell to 79.36 Australian cents from 79.54 cents yesterday. The kiwi declined to 51.29 British pence from 51.48 pence and decreased to 62.24 euro cents from 62.45 cents. It sank to 65.71 yen from 66.73 yen.

The trade weighted index decreased to 72.87 from 73.28.

BusinessDesk.co.nz

Comments from our readers

No comments yet