NZ Dollar holds near 5-month high as Greek leaders cut debt deal

Friday 10th February 2012

The New Zealand dollar held-near a five-month high against the greenback as Greek leaders finally agreed on policy reform and austerity measures needed to secure a new rescue package and avoid defaulting on its debt repayments.

The New Zealand dollar was little-changed at 83.43 US cents at 8am from 83.40 cents at 5pm yesterday. The kiwi slipped to 62.76 euro cents from 62.88 cents yesterday.

Investors were finally given some certainty about Europe’s sovereign debt crisis after Greek political leaders clinched a long-stalled deal with private creditors to secure a second bailout package and avoid missing debt repayments, according to a statement from the Greek Prime Minister’s press office. European Union officials and the International Monetary Fund have been frustrated by a string of broken promises as Greece faces a 14.5 billion-euro bond payment on March 20. The deal came hours before the country’s financial backers began a meeting in Brussels to discuss the deal with Euro-zone finance ministers before a vote on regionwide economic integration in the European Parliament.

“It’s 1 percent solution and 99 percent implementation – it’s still a long road to go,” said Alex Sinton, senior dealer at ANZ New Zealand. “It leaves the New Zealand dollar directionless in terms of the Greek headlines but there is still an underlying demand for the kiwi.”

The European Central Bank left is benchmark in interest rate at a record low 1 percent, in line with estimates of 55 of 57 analysts in a Bloomberg survey. The Bank of England also reviewed monetary policy, holding its benchmark interest rate t 0.5 percent and expanding its asset purchase programme by 50 billion pounds to 320 billion pounds.

New Zealand’s accommodation survey for December and electronic card transactions for January are due for release today.

The New Zealand dollar fell to 77.26 Australian cents from 77.35 cents. It was little-changed at 52.69 British Pence from 52.72.

The kiwi rose to 64.74 Yen from 64.32 yen yesterday, and hit a five-month high 64.85 yen amid growing expectations the world’s third biggest economy is facing its first current account deficit in more than 30 years, having last month posted its first trade deficit since 1980.

The trade-weighted index was down to 73.04 from 73.12.

(BusinessDesk)

BusinessDesk.co.nz

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