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NZ dollar falls against stronger greenback

The New Zealand dollar fell against a broadly strengthening greenback as investors sought shelter in the United States currency amid fears that aid for Greece may not prevent debt crises in other euro zone countries.Traders also said China's recent moneta

NZPA
Wed, 05 May 2010

The New Zealand dollar fell against a broadly strengthening greenback as investors sought shelter in the United States currency amid fears that aid for Greece may not prevent debt crises in other euro zone countries.

Traders also said China's recent monetary tightening added to pressure on commodity-linked currencies, while the US dollar, which rose to its highest since May 2009 against a basket of six major currencies, was supported by signs that the US economy is on the mend.

By 8am today the kiwi was buying US71.99c, down from US72.96c at 5pm yesterday, having been near its highest level in more than three months early yesterday around US73.20c.

The NZ dollar did manage to push up to a 33-month high against the European currency overnight, peaking at 0.5553 euro but then slipped to 0.5536 by 8am today, only slightly above the level at yesterday's local close.

Even with Greece set to receive 110 billion euros ($NZ198.6b) in emergency loans from the European Union and International Monetary Fund, investors are on edge about the fiscal health of other euro zone countries, especially Spain and Portugal.

"There is no faith in what the EU and IMF have proposed for Greece," said Dean Popplewell, chief currency strategist at OANDA, a foreign exchange brokerage in Toronto.

"Capital markets are betting on a Greek default, as Greece's own populace is not going to accept the terms of this rescue, and contagion is a real concern hurting the euro."

The NZ dollar lifted to A79.17c at the local open against the Australian dollar from A78.91c at 5pm, having peaked at a three-month high around A79.35c early today. While the Reserve Bank of Australia lifted its cash rate 25 basis points to 4.5 percent yesterday it failed to back up hopes for a rate rise in June.

The NZ dollar also fell to 68 yen at 8am from 69.22 yen at the local close, while the trade weighted index fell to 67.87 at 8am from 68.28 at 5pm.

NZPA
Wed, 05 May 2010
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NZ dollar falls against stronger greenback
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