Top Scoops

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


NZ dollar may rise on hopes of U.S. auto bail out

NZ dollar may rise on hopes for bail out of U.S. auto industry

By Paul McBeth

Dec. 15 – The New Zealand dollar may rise on optimism the U.S. will find a way to bail out the auto industry, helping prevent the collapse of companies like General Motors which would lead to widespread job losses and may deepen the global economic slump.

The Bush Administration is considering tapping its ‘TARP’ bank bailout fund to finance a rescue package for automakers. New York University Professor Nouriel Roubini told Bloomberg television that a bankruptcy filing by General Motors Corp. or Chrysler LLC would extend the economic slump that’s already so severe that “there’s not going to be a recovery of growth until 2010.” Prices for oil and copper fell after the U.S. Senate failed to pass the automakers’ rescue package last week, putting pressure on currencies like the New Zealand and Australian dollars that rely on exporting.

“Commodity currencies shouldn’t fare too badly, provided the automakers deal goes through,” said Imre Speizer, currency strategist at Westpac Banking Corp. “There’s a smidgeon less risk aversion.”

The kiwi rose to 54.56 U.S. cents from 54.51 cents on Friday, and was up to 49.87 yen from 49.25 yen. It fell to 82.23 Australian cents from 83.34 cents on Friday, and was down to 40.84 euro cents from 41.02 cents.

Speizer said the kiwi may trade “at the top of a tight range” between 54.20 U.S. cents and 54.80 cents today as traders await the start of stock trading in the U.S. this week.

Traders are also awaiting the release today of the Economic Survey of Manufacturing for the September quarter, which may help sharpen forecasts for the pace of the economy in the latest three months. Third-quarter GDP is due to be released next week.

Rio Tinto Group, the world’s third-largest mining company, is reportedly drawing up contingency plans to raise capital that would allow it to take part in future industry consolidation. Last week it announced 14,000 redundancies to help reduce its debt by US$10 billion as demand for metals wanes. Workers at New Zealand’s aluminium smelter in Invercargill will have to wait until next year to find out if their jobs are safe.

In other signs that governments are moving to shore up weakening economies, China will increase its money supply by 17% next year to boost domestic consumption after November trade figures out last week showed imports plummeted 17.9% and exports declined 2.2%, their first fall in seven years.



© 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>>