NZ dollar retreats as Spanish optimism fades, US stocks fall   12 Jun 2012

Hannah Lynch

The New Zealand dollar fell more than half a US cent as optimism over Spain's 100 billion euro lifeline faded after questions were raised about who is going to pay for the bailout, sapping investor confidence and pushing stocks on Wall Street lower.

The kiwi fell to 76.87 US cents at 8am from 77.65 cents yesterday at 5pm. The trade weighted index declined to 70.15 from 70.48.

Stocks on Wall Street fell as investors reassessed the plan to bailout Spain's banking system, with the Standard & Poor's 500 index dropping 1.3 percent to 1308.93. European policymakers are yet to clarify whether the loan granted to shore up Spain's banks will come from the region’s permanent support fund, the European Stability Mechanism or its temporary European Financial Stability Fund.

"Overnight we have seen various calls from Germany and Finland that the money should come from the European Stability Mechanism," said Stuart Ive, currency strategists at HiFX. "The New Zealand dollar is taking its lead from overseas and it means we are seeing a risk-off scenario - at the moment the kiwi has the potential to go as low as 76.20 US cents and there will be more risk towards the end of the week with the Greek elections."

Spain’s rescue comes a week before Greece’s second round of elections on June 17. The result will be closely watched by markets in the event voters deiced to elect a government that decides to leave the region’s shared currency.

The package has also moved Italy into the front line on concern it may be next to succumb to the debt crisis. The yield on Italian 10-year government bonds rose 27 basis points to 6.04 percent, the biggest daily rise since Dec. 8, according to Bloomberg.

Germany, the Netherlands, Austria and Italy will all sell government bonds this week. The Netherlands will sell up to 2.5 billion euros of 2033 bonds on Tuesday, while Germany is set to offer 5 billion euros of 2022 bonds on Wednesday.

New Zealand's accommodation survey for April and electronic card transactions for May are scheduled for release by Statistics New Zealand this morning.

The New Zealand dollar was little changed at 77.87 Australian cents from 77.81 yesterday. The kiwi rose to 61.56 euro cents from 61.45 cents and dropped to 49.64 British pence from 49.90 pence. It sank to 61.04 yen from 61.83 yen.

(BusinessDesk)

Add a comment

Bookmark and Share

News

Presbyterian Church to lead Waitangi Day dawn ceremony

29 Jan 2015 News
  Presbyterian Church to lead Waitangi Day dawn ceremony for first time For the first time in the history of the Presbyterian... more

Upwards NCEA trend continues

29 Jan 2015 News
New Zealand Government Upwards NCEA trend continues Education Minister Hekia Parata has welcomed the release of provisional results ... more

Business

NZ dollar drops after RBNZ abandons bias to raise rates

29 Jan 2015 Business News By Jonathan Underhill
Jan. 29 (BusinessDesk) - The New Zealand dollar dropped, touching a four-year low, after the Reserve Bank abandoned its bias for ... more

NZ venison, lamb ventures win $41 mln of funding under PGP

29 Jan 2015 Business News
Article - BusinessDesk   NZ venison, lamb ventures targeting wealthy consumers win $41 mln of funding By Fiona Rotherham Jan. 29... more

Living

Signing - Next amazing Exhibition at Academy Galleries

28 Jan 2015 Lifestyle
Academy Galleries Signing The New Zealand Academy of Fine Art’ latest exhibition is commemorating 175 years since the signing... more

‘Sunday’ Selected for Byron Bay International Film Festival

28 Jan 2015 Lifestyle
Sunday The Film Kiwi Romance ‘Sunday’ Selected for Byron Bay International Film Festival 2015 New Zealand film... more

Property

Americans the biggest buyers of NZ land since 2010: Linz

29 Jan 2015 Property
Article - BusinessDesk   Americans the biggest buyers of New Zealand land since 2010, Linz data shows By Fiona Rotherham Jan. 29... more

Housing affordability drops 14%, driven by Auckland prices

29 Jan 2015 Property
Article - BusinessDesk   Housing affordability drops 14%, driven by Auckland house price rises By Fiona Rotherham Jan. 29 ... more

Migration

Free new Kiwi workshops return for fresh season

23 Jan 2015 Migration
Newcomer settlement support agency Auckland Regional Migrant Services (ARMS) is kick-starting the New Year with the return of its ... more

Overstayer numbers at record low

22 Dec 2014 Migration
Immigration Minister Michael Woodhouse welcomes new figures showing New Zealand overstayer numbers are at the lowest since 2000. A... more

Travel

Fifteen New Zealand spots to visit in 2015

23 Jan 2015 NZ Tourism
Need some inspiration for the year ahead? Here are some brilliant things to do around the country. 1. Crankworx The world's... more

Holiday parks making most of sunshine

22 Jan 2015 NZ Tourism
Holiday parks are reaping the benefits of the great holiday weather, starting the new year with record-equalling confidence... more

Sport

Mannering caps landmark year at NZRL Awards

29 Jan 2015 Rugby League
NZRL Mannering caps landmark year at NZRL Awards NZ skipper Simon Mannering has captured NZ rugby league’s top honour for... more

Mojo Pulse 2015 Pre-season Games Announced

29 Jan 2015 Netball
Netball Central Zone Mojo Pulse 2015 Pre-season Games Announced 29 January 2015 With only 30 days till the start of the 2015 ANZ... more

Columns

Gordon Campbell on the Eleanor Catton rumpus

29 Jan 2015 Column
Column - Gordon Campbell   Gordon Campbell on the Eleanor Catton rumpus by Gordon Campbell If anyone was in doubt about the... more

Gordon Campbell on the Sabin case, and pressures on Greece and coyotes

28 Jan 2015 Opinion By Gordon Campbell
  Brain fades are one thing, but the brain freeze that seems to have beset the Prime Minister over the Mike Sabin affair is... more

Kiwi Success

Xero names US-based Douglas Jeffries as CFO

29 Jan 2015 Appointments By Tina Morrison
Xero names US-based Douglas Jeffries as CFO as it targets North American market By Tina Morrison Jan. 29 (BusinessDesk) - Xero, the... more

New Zealand scientist receives top award in China

16 Jan 2015 People
Science and Innovation Minister Steven Joyce has welcomed the news that Kiwi scientist Dr Phil Rolston has been awarded the Chinese ... more

Recruitment

Tainui's Mike Pohio resigns

23 Jan 2015 Recruitment
By Fiona Rotherham Jan. 23 (BusinessDesk) - Mike Pohio, chief executive of Tainui Group Holdings, has resigned after eight years at... more

Manufacturing activity rises to decade high in December

22 Jan 2015 Recruitment
By Suze Metherell Jan. 22 (BusinessDesk) - Activity in New Zealand's manufacturing sector rose last month to its highest level in a... more