Kiwi dips below 76 US cents after Spanish bank ratings cut
The kiwi fell after Moody's cut the ratings on Spanish banks amid speculation Europe's debt crisis is spreading, sapping appetite for higher-yielding, or riskier, assets.
BUSINESSDESK: The New Zealand dollar fell in local trading after Moody's Investor Services cut the ratings on Spanish banks amid speculation Europe's debt crisis is spreading, sapping investors' appetite for higher-yielding, or riskier, assets.
The well fell as low as 75.64 US cents from 76.28 cents at 8am and 76.66 cents yesterday at 5pm. That is the lowest it has fallen since December 20. It traded at 75.62 at 5pm.
The trade weighted decreased to 68.77 from 69.24.
The kiwi is poised for a 3.5% decline this week after Moody's downgraded 16 Spanish banks including, recently nationalised Bankia SA.
Nine firms were cut three notches, while seven were kept on review.
The main drivers for the cuts included rising loan defaults and the renewed risk of a recession.
"The whole picture looks messy - it's a contagion effect across Europe," said Alex Hill, senior currency strategist at HiFX.
"We have seen more downturn in the kiwi with a marked slip in today's session."
"The kiwi could easily get between 74 cents to 75 cents [next week] before we start to see this move exhausted," he said.
It fell to 59.71 euro cents from 60.11 cents at 8am today as uncertainty about Greece fiscal and political situation continued.
Fitch Ratings downgraded the indebted nation’s credit rating one level to CCC from B-, citing “heightened risk” that the nation will not be able to sustain EU membership.
Leaders of the Group of Eight nations will meet near Washington DC this weekend and are expected to discuss how to deal with Greece, as well as economic growth in the US, China and Japan.
"Obviously, policymakers will be looking for policy maker rhetoric but we need something solid," Mr Hill said.
The kiwi was little changed at 76.95 Australian cents from 77.03 cents at 5pm yesterday.
It fell to 48.03 British pence from 48.17 pence and declined to 60.05 yen from 61.54 yen.
Hannah Lynch
Fri, 18 May 2012
Fri, 18 May 2012
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Kiwi dips below 76 US cents after Spanish bank ratings cut
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