NZ dollar holds near 5-year low before Hollande, Merkel meeting

Monday 6th July 2015

The New Zealand dollar traded near a five-year low ahead of a meeting between German Chancellor Angela Merkel and French President Francois Hollande today where they will discuss a possible response to Greece's rejection of austerity measures tied to bailout money.

The kiwi traded at 66.70 US cents at 5pm in Wellington, having earlier reached a five-year low of 66.40 cents, from 66.93 cents in New York last Friday. The trade-weighted index fell to 70.40 from 70.61 on Friday.

Greece's referendum showed 61.3 percent of those who voted wanted to reject the terms of a bailout with the country’s creditors, raising the prospect of the Mediterranean nation leaving the euro-zone and its shared currency. The Merkel-Hollande meeting in Paris comes ahead of an emergency summit of European leaders called for Tuesday. Before the leaders meet, the European Central Bank governing council is scheduled to discuss tonight what to do about Greek lenders that are dependent on its emergency credit, Bloomberg reported.

"Overall the trend for the kiwi is lower for many different factors," said Stuart Ive, senior dealer at OMF. "Markets will be very much watching carefully for further comments. The Greeks are doing themselves no favours by saying they won't do anything."

Ive says support for the kiwi is at 66.20 US cents and resistance at 67.90 cents.

The kiwi may trade between 65 US cents and 69 cents this week, according to a BusinessDesk survey of eight currency advisers. Five expect the New Zealand dollar will fall this week, while three have a neutral outlook for the currency.

Prime Minister John Key told his weekly post-Cabinet press conference the kiwi’s decline was making life “far easier” for exporters, whose receipts are typically lower when the currency is strong. “We just need that floating exchange rate to provide that buffer, if you like, for a really, really important part of stimulus,” he said.

The New Zealand dollar advanced to 89.24 Australian cents from 88.58 cents on Friday ahead of tomorrow’s Reserve Bank of Australia meeting. The local currency traded at 81.45 yen from 82.75 yen on Friday. The kiwi fell to 42.81 British pence from 43.06 pence on Friday. It was little changed at 60.42 euro cents from 60.58 cents on Friday. The kiwi traded at 4.1367 yuan from 4.1547 yuan on Friday.

Two-year swaps rose about 4 basis points to 2.93 percent and the 10-year swaps gained 3 points to 3.86 percent.

BusinessDesk.co.nz

Comments from our readers

No comments yet