NZ dollar drops to month-low as Eurozone woes endure

NZ dollar drops to month-low as market picks next European sovereign to fall

By Paul McBeth

Nov. 29 (BusinessDesk) – The New Zealand dropped to a fresh month-low as European sovereign debt woes keep investors preparing for the next country in the region to ask for financial aid.

The IMF and EU today approved an 85 billion euro bail-out for Ireland, shifting the sovereign debt concerns away from the ailing nation. Portuguese officials denied reports a majority of Euro-zone governments are pressuring Portugal to ask for financial aid from the International Monetary Fund and European Union, while Spanish Prime Minister Jose Luis Rodriguez Zapatero warned speculators betting on a his country defaulting “are going to be wrong.” Hungary also has investors concerned after its government told citizens to shift private pension funds into government control or lose their state superannuation.

“The next European country to be in the spotlight will be the thing this week, and the market’s picking either Portugal or Hungary,” said Imre Speizer, markets strategist at Westpac Banking Corp. The tick on the Irish bail-out “will likely see a bounce in the kiwi today,” but the overall debt woes will probably drag on the currency over the week, he said.

The kiwi fell as low as 74.81 U.S. cents from 75.51 cents on Friday in New York, and recently traded at 75.07 cents. It dropped to 68.25 on the trade-weighted index of major trading partners’ currencies from 68.54, and declined to 63.01 yen from 63.38 yen. It rose to 77.87 Australian cents from 77.73 cents last week, and decreased to 56.51 euro cents from 56.88 cents. It was little changed at 48.16 pence from 48.09 pence last week.

Speizer said the currency will face top-side resistance at 76 U.S. cents today and will look to break 74 cents this week.

Today’s National Bank Business Outlook is expected to continue its gradual trend higher. Government data today is expected to show a trade deficit of $438 million in the month of October, according to a Reuters survey.

(BusinessDesk)

© Scoop Media