NZ dollar falls vs. greenback, euro as Spanish bailout remains in focus

Tuesday 9th October 2012

The New Zealand dollar fell against the greenback and the euro as European finance ministers prepare to meet in Luxembourg amid speculation Spain is struggling to avoid a bailout request.

The New Zealand dollar fell to 82.02 US cents at 8am in Wellington from 81.77 cents at 5pm yesterday. The kiwi declined to 63.28 euro cents from 62.94 cents. The trade weighted index decreased to 73.24 from 73.06.

Eurozone finance ministers declared the 500 billion European Stability Mechanism fund operational ahead of a meeting on Tuesday. The agenda will be dominated by Spain's economic reforms and Mediterranean nation's reluctance to formally ask for a financial bailout. Spain would be the first European nation to participate in the European Central Bank's bond-buying programme. Ministers from the wider European Union meet on Wednesday.

"Spain is still on the sidelines and there is still talk about when not if they will ask for a bailout," Alex Sinton, senior dealer at ANZ New Zealand. "People are uncertain about where things will end up in the last quarter of the year."

The kiwi is likely to trade in a range of 63.05 euro cents to 63.45 cents, Sinton said.

In Germany, the region's largest economy, industrial production was in line with market expectations, falling 0.5 percent in August to be down 1.4 percent annually.

Markets in the US will reopen today after being closed on Monday for Columbus Day.

The New Zealand Institute of Economic Research will release its quarterly survey of business opinion this morning. That's followed by QV monthly house prices and electronic card transactions from Statistics New Zealand.

The New Zealand dollar fell to 64.25 yen from 64.21 yen yesterday at 5pm. The kiwi rose to 51.16 British pence from 50.74 pence. It was little changed at 80.40 Australian cents from 80.47 cents.

BusinessDesk.co.nz

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