Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search


NZ dollar gains on Citigroup bailout

NZ dollar gains as Citigroup bailout builds appetite for risk

By Paul McBeth

Nov. 25 – The New Zealand dollar rose a second day after U.S. and European stocks rose on a rescue package for Citigroup and a U.K. spending plan to halt its recession, lifting investor appetite for higher-yielding, or riskier, assets.

The U.S. government pledged to guarantee US$306 billion of toxic assets owned by Citigroup in a package that will be passed by the Congress in January. The package saw the banking giant’s stocks rise 52%, paring its 60% loss in value last week. European stocks were buoyed by English Chancellor of the Exchequer Alistair Darling’s 20 billion pound recovery package for the British economy. The FTSE 100 bounced 9.8% and the DAX 30 jumped 10.3% on the news.

“The rise in equities has set the tone for the kiwi,” said Imre Speizer, currency strategist at Westpac Banking Corp. “There’s been a drop in risk aversion.”

The New Zealand dollar rose to 54.42 U.S. cents from 52.94 cents yesterday, and increased to 52.66 yen from 50.45 yen. It fell to 84.14 Australian cents from 84.44 cents.

Speizer said while the 54 U.S. cent mark was a “key lead” for the kiwi, it is still expected to trend lower in the long-term. He said the New Zealand dollar will likely trade between 54 U.S. cents and 55.50 cents today.

The rebound in global stocks reinvigorated appetite for the kiwi and may last “for a while,” said Danica Hampton, currency strategist at Bank of New Zealand.

The U.K. government’s stimulus package helped offset gloomier figures in Germany, where the latest Ifo business index fell to 85.8 in November, its lowest point in 16 years.

The fall in the Ifo index suggests the Eurozone recession will probably go “well into 2009,” Hampton said. The ongoing fears of a deep global recession will continue to see support for the U.S. dollar and yen, she said.


© Scoop Media

Top Scoops Headlines


Scoop HiveMind Project: Universal Basic Income - Are We Up For It?

This is an opportunity for you as one of the 4 million potential funders and recipients of a Universal Basic Income to collectively consider the issue:
1. Is UBI is a desirable policy for New Zealand; and
2. How should a UBI system work in practice. More>>


Lyndon Hood: National Announces Plan To Hit Youth With Big Mallets

The National party has announced its youth justice policy, which includes a controversial plan for recidivist serious youth offenders to be hit over the head with a comically large rubber mallet. More>>


Lyndon Hood: This ->

It's been brought to my attention that Labour's new campaign slogan is "Let's do this". A collective call to action. A mission. I myself was halfway out of the couch before I realised I wasn't sure what it was I was supposed to do. More>>


Scoop Hivemind Report: What New Zealanders Think About Affordable Housing

Ordinary citizens have had very few venues where they can debate and discuss as to what they believe has led to the crisis in affordable housing and how we might begin to address this. The HiveMind on affordable housing was about redressing the balance. More>>


New Hivemind Exploration: Opening The Election - Freshwater Quality

This is an opportunity for you as one of the 4 million guardians of our common water resources to help us find mutually agreeable solutions to the critical task of collectively managing these resources for health and sustainability. More>>