NZ dollar drops to five-week low vs. Russian ruble as Putin comments ease tensions
By Tina Morrison
May 8 (BusinessDesk) – The New Zealand dollar dropped to a five-week low against the Russian ruble as political tensions eased in Ukraine following conciliatory comments from Russian president Vladimir Putin.
The kiwi touched 30.24 ruble this morning, and was trading at 30.27 ruble at 8am in Wellington, from 30.80 ruble at 5pm yesterday. The local currency slid to 86.69 US cents from 86.88 cents yesterday after Reserve Bank governor Graeme Wheeler said he may sell the kiwi which he considers overvalued.
The Russian currency advanced, the nation’s equities rallied and its government bond yields fell after Putin called on separatists in eastern Ukraine to postpone Sunday’s referendum on independence for the mostly Russian-speaking region. Putin also said Moscow had withdrawn troops from the border with Ukraine, which had been a source a tension with Western powers.
“It seems that Putin has taken a less provocative stance and therefore that’s toned down a lot of nervousness and unwound some of the recent safe haven buying of assets,” said Peter Cavanaugh, client advisor at Bancorp Treasury Services.
Putin made his comments after talks with the Organisation for Security and Cooperation in Europe, which said it would soon propose a “road map” to defuse the Ukraine crisis.
Still, Bancorp’s Cavanaugh said deep tensions in the region were long-standing and were unlikely to be resolved easily.
“There is no quick fix,” Cavanaugh said.
In New Zealand today, traders will be eyeing the midday release of the latest house price figures for April from state valuer Quotable Value. Finance Minister Bill English speaks to the INFINZ dinner in Auckland tonight.
China’s trade balance for April is also scheduled for publication today.
Tonight, Federal Reserve chair Janet Yellen meets with the Senate Budget Committee. Yesterday, in testimony to Congress, Yellen said both the US economy and the American jobs market have continued to improve, but stressed that the Federal Open Market Committee plans to maintain the stream of easy money.
The New Zealand dollar slipped to 92.88 Australian cents from 93.02 cents yesterday ahead of the release of Australia’s March employment figures today at 1:30pm New Zealand time.
The local currency edged lower to 62.30 euro cents from 62.38 cents ahead of the European Central Bank decision on interest rates tonight where no change is expected.
The kiwi was little changed at 51.12 British pence from 51.16 pence yesterday ahead of the Bank of England decision on interest rates where the benchmark is expected to remain on hold.
The New Zealand dollar advanced to 88.34 yen from 88.26 yen yesterday. The trade-weighted index weakened to 80.32 from 80.43 yesterday.