Kiwi tumbles after OECD cites global growth risks

BUSINESSDESK: The New Zealand dollar tumbled after the OECD warned of the risks that the eurozone’s debt crisis poses to the rest of the world.

The kiwi fell to 75.40 US cents at 8am, from 76.52 cents at 5pm yesterday. It had jumped by a similar amount yesterday.

The trade weighted index decreased to 68.59 from 69.23.

The kiwi sank as EU leaders meet in Brussels to discuss how to bolster the region's growth. The OECD warned the region's debt crisis risks damaging the world economy.

"The currency market is taking the view that it will be a meeting of disappointment," said Imre Speizer, market strategist at Westpac Banking Corp.

"If the kiwi breaks below 75.20 cents you can assume that the May sell-off has resumed."

The OCED warning comes after leaders from the eight largest industrial economies pushed for Greece to stay in the euro.

Divisions are still evident over the need for growth versus austerity measures between the G8 nations.

Greece's three main political parties were unable to form a government after the nation's May 6 election. Fresh elections will now be held in early June.

The New Zealand dollar fell to 47.85 British pence from 48.37 pence yesterday at 5pm after the International Monetary Fund said more stimulus, such as quantitative easing is needed to boost the nation's economy.

The Bank of England will release the minutes from its May meeting today. Its base rate remains unchanged at 0.5%.

In the world’s largest economy, the United States, existing homes sales rose 3.4% last month, according to the National Association of Realtors.

That is the best annual sales pace since May 2010, helping firm up optimism the housing market is stabilising.

New home sales figures are out today, with purchases expected to have climbed 2.9% to a 4.61 million annual rate in April, according Bloomberg survey.

Initial jobless claims and durable goods orders are released later tomorrow.

Finance Minister Bill English's fourth Budget will be the major local news this week.

Mr English is expected tomorrow to unveil a path towards getting the government's books back into operating surplus in 2014-15 and has promised a second successive "zero" Budget.

The kiwi decreased to 76.84 Australian cents from 77.02 cents and fell to 59.50 euro cents from 59.82 cents. It fell to 60.37 yen from 60.73 yen.