By Paul McBeth
Tuesday 31st March 2009 |
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US President Barack Obama told ailing automakers General Motors and Chrysler LLC they must survive without becoming "wards of the state" and have one last chance to "fundamentally restructure" or face bankruptcy. His administration forced GM chief executive Rick Wagoner to resign, and pressed Chrysler to form a partnership with Italian carmaker Fiat SpA.
Meanwhile, Bank of America and Citigroup Inc. sank 17.3% and 9.9% respectively, helping drive the Dow Jones Industrial Average down 3.3%, after Treasury Secretary Timothy Geithner said some banks will require "large amounts" of assistance.
"The global economy is not out of the woods yet, and risky assets are being rejected," said Khoon Goh, senior markets economist at ANZ National Bank. "When risk appetite disappears, we could see the kiwi fall lower."
The kiwi rose to 56.17 US cents from 56.08 cents yesterday, and gained to 54.56 yen from 54.08 yen. It declined to 82.53 Australian cents from 82.59 cents, and increased to 42.63 euro cents from 42.50 cents.
Goh said the currency may trade between 55.50 US cents and 57 cents today as it begins to sink lower. "I think 58 US cents was the topside for the kiwi, and it will head lower from here," he said. The Volatility Index, or VIX, which measures short-term volatility on the S&P 500 index, rose to 45.8 from 41, showing a decline in investors' appetite for higher-yielding assets.
In New Zealand, the National Bank Business Outlook survey comes out this afternoon, and is expected show a deteriorating situation. "February's survey looked extremely weak on all fronts, most notably with respect to employment and investment intentions, both of which we suspect will continue to look dreadful in the March update," said Danica Hampton, currency strategist at Bank of New Zealand.
The survey will be a "sobering reality check" which will quash the excitement for a potential recovery, she said.
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