NZ dollar rises to 4-month high vs. Russian ruble on rising tensions over Ukraine
By Tina Morrison
Sep. 1 (BusinessDesk) - The New Zealand dollar rose to a four-month high against the ruble on concern Russia may face more sanctions over Ukraine, further denting the fragile Russian economy.
The kiwi touched a high of 31.14 rubles and was trading at 30.95 rubles at 8am in Wellington, from 30.83 rubles at 5pm on Friday. The local currency was little changed at 83.58 US cents from 83.59 cents at the New York close and 83.67 cents on Friday. US markets are closed for a Labor Day holiday today.
An escalation of fighting in Ukraine has prompted European leaders to threaten more sanctions against Russia, where the nation's economy is currently expected to grow just 0.5 percent this year, the slowest pace since a 2009 contraction. However Russian president Vladimir Putin yesterday criticised European leaders for supporting Ukraine and said talks on the conflict should include the issue of 'statehood' in eastern Ukraine, suggesting he is unlikely to back down.
"Tensions seem to be on the rise again in the Ukraine, after what Western officials called a Russian invasion in everything but name last week," Bank of New Zealand currency strategist Raiko Shareef said in a note. "Investors are braced for a fresh round of sanctions."
In New Zealand today, traders will be eyeing second quarter terms of trade data, scheduled for release at 10:45am. The trade data is expected to weaken, reflecting the impact of lower dairy prices.
They will also be gauging Chinese manufacturing reports due for publication today for an indication of how New Zealand's largest trading partner is faring.
The New Zealand dollar edged up to 89.56 Australian cents from 89.47 cents on Friday ahead of the Reserve Bank of Australia decision on interest rates tomorrow.
The kiwi advanced to 63.64 euro cents from 63.50 cents on Friday after a report showed European consumer prices rose just 0.3 percent in August from the year earlier, the weakest rate since October 2009. Traders are speculating the European Central Bank may announce more stimulus at its meeting on Thursday.
The local currency slipped to 50.34 British pence from 50.45 pence and rose to 87.03 yen from 86.87 yen. The trade-weighted index was at 78.96 from 78.90 on Friday.