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NZ dollar gains amid talk of French rating cut

NZ dollar gains as France’s AAA credit rating comes under threat

By Paul McBeth

Dec. 21 (BusinessDesk) – The New Zealand dollar rose back above 74 U.S. cents and advanced against the euro as investors amid speculation France’s triple-A sovereign credit rating is under threat.

The trans-Tasman currencies benefited from traders selling the euro after a Bloomberg report cited analysts’ speculation that France’s rating was under threat of a downgrade. That came as Moody’s Investors Service continued to talk down the Euro-region, saying Spain’s rating might be cut over its “substantial funding requirements.” The euro fell 0.2% to US$1.3118 amid the ongoing concerns about the region’s sovereign debt woes.

The trans-Tasman currencies gained as “the euro was sold on France’s debt issues,” said Alex Sinton, senior dealer at ANZ New Zealand. “The market got itself short (on the kiwi) hoping for a drop below 73 (U.S. cents)” which didn’t happen, he said.

The kiwi rose to 74.28 U.S. cents from 73.84 cents yesterday and advanced to 67.27 on the trade-weighted index of major trading partners’ currencies from 66.94. It increased to 62.19 yen from 61.92 yen yesterday, and was unchanged at 74.74 Australian cents. It climbed to 56.58 euro cents from 56.19 cents yesterday, and gained to 47.85 pence from 47.59 pence.

Sinton said the currency may trade between 73.80 U.S. cents and 74.50 cents today and may try to end the year on an up-note on light trading, with a target at 75.50/76 cents.

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