NZ dollar gains vs. euro as Greek report highlights funding gap

Tuesday 13th November 2012

The New Zealand dollar gained against the euro and the greenback after a report proposed giving Greece two more years to meet budget targets while highlighting the scale of the fiscal gap.

The kiwi rose to 81.76 US cents from 81.58 cents at 5pm in Wellington yesterday. The currency rose to 64.31 euro cents from 64.11 cents.

Bloomberg News cited a draft document from the European Central Bank, the European Commission and the International Monetary Fund, a grouping known as the troika, giving Greece a two-year extension to meet budget targets to ease the impact of austerity measures. Risk currencies including the kiwi and the Australian dollar have been helped by strong trade data from China.

The troika report "gives Greece an extra two years but the report highlights the huge funding shortfall facing Greece," said Mike Jones, currency strategist at Bank of New Zealand. "We're now staring down the barrel of more delays and uncertainty when Greece gets its new packet of cash. There was broad selling of the euro against all major currencies."

The kiwi has gained because it is "a game of trying to pick the least worst economies out there," he said.

Figures last weekend showed China's trade surplus was US$32 billion last month, which beat economist estimates. China is New Zealand's biggest export market after Australia.

The kiwi dollar rose to 78.41 Australian cents from 78.31 cents and the trade-weighted index rose to 73.23 from 73.05. The New Zealand dollar gained to 51.48 British pence from 51.29 pence and traded at 64.97 yen from 64.83.

BusinessDesk.co.nz

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