NZ dollar recovers ground amid Australian growth, European debt fears
Sept. 7 (BusinessDesk) - The New Zealand dollar clawed back losses after Australia’s economy grew faster than expected in the second quarter this year, while European debt fears kept investors nervous about the health of the global economy.
The kiwi dollar rose to 82.86 U.S. cents at 5pm from 82.17 cents at 8am, and was little changed from 82.88 cents yesterday.
Appetite for the trans-Tasman currencies was stoked by a 1.2 percent expansion in Australia’s economy, beating the 0.9 percent growth picked by analysts, as manufacturing and transport and freight services helped revive growth which stalled at the start of the year when Queensland was hit by major flooding.
After the release, the kiwi fell below 78 Australian cents for the first time in nearly two months, before recovering to 78.03 cents at 5pm, down from 78.83 cents yesterday.
Investors have been reluctant to put their funds into Europe as the region struggles to cope with the mounting indebtedness of some of the Euro-zone’s member states, ahead of central bank meetings and a vote in the German Constitutional Court as to whether the region’s bail-out package for Greece is legal.
“People are questioning what this was and if it meant Europe is finally going to implode,” said Robert Rennie, chief economist at Westpac in Sydney. “I think it’s going to be tough to get back through the mid 84s and into the mid 85 level at the end of August – things can’t be cured by every sprout of optimism here and there, which is what we are getting.”
The kiwi dollar rose to 63.86 yen from 63.64 yen in yesterday and slipped to 58.84 euro cents from 58.95 cents. It fell to 71.48 on the trade-weighted index from 71.65 yesterday, and rose to 51.75 pence from 51.52 pence yesterday.