NZ dollar falls as ECB bank lending disappoints, GDP looms

Thursday 22nd December 2011

The New Zealand dollar fell ahead of the release of economic growth figures for the third quarter and amid concern European Central Bank lending support for the region’s banks won’t be enough to contain the debt-crisis.

The kiwi dollar fell to 76.68 US cents just before 8am, from 77.03 cents at 5pm yesterday. It reached a high of 77.71 cents overnight.

The European Central Bank lent $489 billion euros to 523 of the regions banks at 1 percent, giving them access to cheap cash so they can continue extending credit to companies and households, though the move underwhelmed financial markets.

Figures this morning are expected to show the New Zealand economy accelerated to a 0.6 percent pace in the third quarter, having almost stalled three months earlier.

“Essentially investors are saying the ECB actions aren’t going to the crisis and they need to do more,” said Dan Bell, senior currency strategist at HiFX. “Everybody is expecting a positive (GDP) number on the basis of the Rugby World Cup – it’s one event though so we aren’t going to get too carried away with it.”

The kiwi dollar fell to 59.88 yen from 59.94 yen yesterday, and 48.97 British pence from 49.15 pence. It was little changed at 58.80 euro cents from 58.76 cents yesterday and 76.17 Australian cents from 76.12 cents

“The market is still range bound for now but we may see the kiwi broaden over the next few weeks,” Bell said.

The trade-weighted index was little changed at 68.69 from 68.77.

BusinessDesk.co.nz

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