The kiwi fell after Moody's delayed its decision on whether to cut the credit ratings of European lenders amid fears the euro zone may face more stresses on its ability to repay sovereign debt.
BUSINESSDESK: The New Zealand dollar fell through the local trading session after Moody’s delayed its decision on whether to cut the credit ratings of a slew of European lenders amid fears the euro-zone may face more stresses on its ability to repay sovereign debt.
The kiwi fell to 82 US cents from 82.48 cents at 8am and was down from 82.33 cents on Friday in New York.
The trade weighted index fell to 73.29 from 73.48.
The Wall Street Journal reported Europe’s lenders are bracing for a mass downgrade after Moody’s Investors Service put off its decision on whether to cut the credit ratings of 114 banks across 16 countries in the region.
The yield on Spain’s 10-year government bonds rose 2.8 basis points to 6.015% amid renewed concerns the Mediterranean nation may have to prop up a private banking sector stretched by high unemployment and low growth.
That has reignited fears the euro zone’s sovereign debt crisis may re-emerge and force other nations to ask for regional and International Monetary Fund bailouts.
“More of the issue is about Spanish banks rather than the sovereign,” Mike Jones, currency strategist at Bank of New Zealand, said.
“Negative headlines throughout the day saw the kiwi and Aussie dollars helped lower, and it looks like we’re going through a bit of a shift in market sentiment,” he said, referring to the trans-Tasman currencies colloquially.
Mr Jones said the market will be watching auctions of Spanish debt on Tuesday and Thursday, especially the sale of 10-year bonds later in the week.
An IMF meeting on Friday will also come under scrutiny for any signs of stability in the euro-zone area.
The New Zealand and Australian dollars initially got a fillip in the local session from China widening the trading band for the currency in a sign the world’s second-biggest economy isn’t heading for as fast a slowdown as some economists feared.
The kiwi fell to 5.1728 yuan from 5.1788 last week.
The kiwi rose to 82.48 US cents from 82.33 cents at the close of trading in New York on Friday. It gained to 5.1945 yuan from 5.1788 last week.
New Zealand’s first-quarter inflation is the only local data of note this week, with economists predicting consumer prices index growth of 0.6% in the quarter.
A BusinessDesk survey of five strategists predict the kiwi will pare some of its gains this week if inflation shows the Reserve Bank has room to keep interest rates lower for longer.
The kiwi was little changed at 62.91 euro cents from 62.93 cents last week, and fell to 51.71 pence from 51.84 pence.
It rose to 79.39 Australian cents from 79.15 cents last week, and fell to 66.16 yen from 66.54 yen.
