NZ dollar dips as investor fears over Turkish economy ease

Wednesday 15th August 2018

The New Zealand dollar fell as fears over Turkey's financial woes eased after the nation's finance minister said his government will protect its currency which has been in freefall for the past week.

The kiwi declined to 65.70 US cents as at 8am in Wellington from 65.99 cents yesterday. The trade-weighted index decreased to 71.57 from 71.76 yesterday.

The US dollar index gained 0.3 percent and stocks on Wall Street rallied after investors took heart from Turkish finance minister Berat Albayrak that his nation will take steps to protect the lira. Turkey's high level of inflation and foreign indebtedness became a concern for global markets last week when US President Donald Trump threatened to impose stiff tariffs on the nation, triggering a slump in the lira and raising fears of instability among European lenders. That weighed on emerging markets but efforts to support Turkey's currency have allayed some fears of a contagion effect. The lira strengthened 7.1 percent to 6.3719 per US dollar overnight.

"Turkish concerns looked to ease overnight, but the NZD remained under pressure as a generally stronger USD leaves it looking to push further towards the low-65 cent level," ANZ Bank New Zealand economists Liz Kendall and Philip Borkin said in a note. "While the NZD is arguably due for a period of consolidation, price action looks weak."

Local data today include residential house sales and prices, which are expected to show the domestic property market continuing to slow.

The kiwi traded at 57.90 euro cents from 57.87 cents yesterday as European data was more upbeat, with stronger than expected German growth and improving investor sentiment. The local currency was unchanged at 51.66 British pence as figures showed UK unemployment falling to 4 percent in the June quarter, the lowest level since February 1975.

The New Zealand dollar was little changed at 90.76 Australian cents from 90.71 cents yesterday ahead of a consumer confidence survey and wage inflation data. It fell to 4.5208 Chinese yuan from 4.5407 yuan, and traded at 73.04 yen from 73.12 yen yesterday.

(BusinessDesk)

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