The New Zealand dollar dropped while interest rate swaps eased a few basis points in reaction to news that South Canterbury Finance had called in receivers.The NZ dollar fell by about 40 forex pips to 7037USc in response to the announcement, which came ou
The New Zealand dollar dropped while interest rate swaps eased a few basis points in reaction to news that South Canterbury Finance had called in receivers.
The NZ dollar fell by about 40 forex pips to 7037USc in response to the announcement, which came out at around 9.32 a.m.
“Certainly the swap rates have fallen by about 3 basis points but bond yields have not moved much,” ASB Bank chief economist Nick Tuffley said.
Swap rates are closely related to where people think short term rates are going to be trading at in the future.
Mr Tuffley said that, on balance, the fact that South Canterbury’s collapse is “probably not going to be good for the economy” had filtered through into swaps.
“It’s a similar reaction to what you would get after a bit of softer-than-expected economic data,” Tuffley said.
