NZ dollar jumps against euro on prospects of ECB stimulus

NZ dollar jumps against euro on prospects of ECB stimulus

By Tina Morrison

April 14 (BusinessDesk) – The New Zealand dollar jumped against the euro on signals the European Central Bank is poised to introduce more stimulus to boost inflation.

The kiwi increased to 62.70 euro cents at 8am in Wellington from 62.16 cents at 5pm on Friday. The local currency was at 86.81 US cents at 8am in Wellington, from 86.85 cents at the New York close and 86.37 cents at 5pm on Friday.

European Central Bank president Mario Draghi, speaking after the International Monetary Fund’s spring meeting in Washington, warned that further strength in the euro would prompt more stimulus. The ECB earlier this month kept interest rates steady at a record low 0.25 percent and Draghi said its members were unanimous in their willingness to begin quantitative easing if inflation stayed well below their 2 percent target. Policymakers are concerned that low inflation could hurt the region’s economic recovery by reducing consumer spending and making it more difficult to repay debt.

“The NZD/EUR looks set to bounce early this week, given ECB president Draghi’s EUR-negative comments over the weekend,” Bank of New Zealand currency strategist Raiko Shareef said in a note. “While the currency is not a policy target for the ECB, senior officials have taken to reminding markets about its importance in price stability.”

In New Zealand today, traders will be eyeing the BNZ-BusinessNZ Performance of Services Index for March, scheduled for release at 10:30am and the March quarter Consumers Price Index, due on Wednesday.

The New Zealand dollar gained to 92.43 Australian cents from 92.09 cents on Friday ahead of the publication tomorrow of the Reserve Bank of Australia’s minutes from its last meeting.

The kiwi advanced to 51.91 British pence from 51.50 pence on Friday ahead of the release of reports on UK employment and inflation this week.

The local currency rose to 88.20 yen from 87.77 yen on Friday on speculation the Bank of Japan may introduce further stimulatory measures following reports Japanese Prime Minister Shinzo Abe will “confer” with Bank of Japan governor Haruhiko Kuroda before the central bank’s next policy meeting on April 30.

The trade-weighted index advanced to 80.46 from 80.02 on Friday.

(BusinessDesk)

© Scoop Media