NZ dollar pares decline on current account, euro hopes

Article – BusinessDesk

NZ dollar pares loss on optimism Europe’s debt woes are receding; current account narrows

NZ dollar pares loss on optimism Europe’s debt woes are receding; current account narrows

By Paul McBeth

March 21 (BusinessDesk) – The New Zealand dollar pared losses through the local trading session on optimism Europe’s sovereign debt woes are receding and after government figures showed the local current account deficit narrowed in the tail-end of last year.

The kiwi rose to 81.89 US cents at 5pm from 81.66 cents at 8am, paring its loss from yesterday when it traded at 82.44 cents. The trade-weighted index fell to 73 from 73.38 yesterday.

The Dollar Index, a measure of the greenback against a basket of currencies, fell 0.4 percent to 79.41 as traders’ appetite for risk-sensitive assets was bolstered by the Greek parliamentary vote in favour of legislation to secure aid for the debt-stricken nation was passed, shoring up confidence in Europe’s ability to beat its sovereign debt crisis.

“People were talking about the Greek parliament approval,” said Imre Speizer, market strategist at Westpac Banking. “If the kiwi stays above 81.86 US cents then it’s going to keep going higher over the next while.”

The kiwi sank yesterday after BHP Billiton, the world’s biggest mining company, warned Chinese demand for iron ore was flattening out, and dairy prices on Fonterra Cooperative Group’s online trading platform dropped 4.5 percent to an eight-month low.

New Zealand government figures showed a narrower current account deficit of $2.09 billion than expected in the three months ended Dec. 31, amid record exports of dairy products and smaller dividends paid out to foreigners. The annual gap shrank to $8.3 billion, or 4 percent of gross domestic product.

That comes ahead of tomorrow’s fourth-quarter GDP figures, which are expected to show New Zealand’s economy grew at a pace of 0.6 percent in the period.

Speizer said “the data has been okay-to-good” and indicates “we are recovering.”

The New Zealand dollar was little changed at 77.99 Australian cents from 77.92 cents yesterday, and fell to 68.53 yen from 68.77 yen.

It declined to 61.70 euro cents from 62.28 cents yesterday and retreated to 51.85 to pence from 51.93 pence.

(BusinessDesk)

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