Dollar languishes - but rises against Euro

Monday 20th December 2010

The New Zealand dollar languished at lower levels today and continues to trade around a decade low against the Australian currency, but it rose against the euro.

The NZ dollar was at US73.64c at 5pm, little changed from US73.65c at 8am, and down from US74.20c at 5pm on Friday.

It was at A74.58c at 5pm from A74.52c at 8am, which was down from A74.76c at 5pm on Friday. It dropped to around A74.30c on Saturday morning.

The Australian dollar hit a record high against the euro and a 25-year high against sterling, but the NZ dollar market was quiet ahead of balance of payments data on Wednesday and gross domestic product data on Thursday.

"Despite the onset of the holiday season, the week ahead is shaping up as anything but for local markets and the NZ dollar," BNZ said in a report.

The euro was weak after Moody's multi-level downgrade of Ireland's credit rating last week affirmed the severity of the euro zone debt crisis.

Political tension is also a theme this week, with South Korea due to begin an artillery exercise today on the border island that North Korean guns attacked last month. North Korea's reaction will be watched by markets.

"Risk aversion remains in the market," ASB said in a report.

The economic recovery in New Zealand has been disappointing, with the Reserve Bank of New Zealand not expected to raise the official cash rate again until June.

ANZ bank said the NZ dollar cross with the aussie has the ability to go lower. A move into the A73c territory could not be ruled out, with Reserve Bank of Australia meeting minutes to be released tomorrow.

The trade weighted index was little changed at 66.95.

The NZ dollar rose to 0.5616 euro from 0.5582 euro on Friday, but eased to 61.89 yen from 62.19 yen.

NZPA

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