NZ dollar edges up from 5-year low, may resume slide   29 Jun 2015

NZ dollar edges up from 5-year low, may resume slide as Greek deadline looms

By Jonathan Underhill

June 29 (BusinessDesk) - The New Zealand dollar rose from a five-year low but may yet resume its slide as the deadline looms for Greece to make a debt repayment it can't afford after creditors rejected Prime Minister Alexis Tsipras's 11th-hour request for time to hold a referendum.

The kiwi traded at 68.32 US cents as at 5pm in Wellington, having earlier fallen as low as 67.90 cents, the lowest level since June 2010, from 68.42 cents at the New York close. The trade-weighted index dropped to 71.70 from 71.93 on Friday.

Greek PM Tsipras declared a bank holiday and restrictions on bank withdrawals after the European Central Bank at the weekend froze the level of emergency funding available to the country's banks, halting a run on lenders by Greek citizens worried they would lose their savings. Traders are concerned a Greek default could lead to its exit from the Eurozone and could prompt more departures from the common currency.

"The fact that they've gone with capital controls with the banks is a pretty major step, and there could well be a backlash," said Imre Speizer, strategist at Westpac Banking Corp. "It's hard to know what London's going to do with it tonight, but we're going to have to wait and see what the referendum does."

"Opinion polls (on the referendum) seem to be mixed," he said. "If it plays out badly, the kiwi will fall."

The New Zealand dollar could fall as low as 66 US cents this week as investors shed riskier assets in favour of safe havens amid uncertainty about Greece's ability to repay debts. The kiwi may trade between 66 US cents and 70.50 cents this week, according to a BusinessDesk survey of 13 currency advisers. Eight expect the currency to decline, while three pick a gain and two say it will remain largely unchanged.

"What happens with the kiwi/euro is a bit more ambiguous," Speizer said.

The New Zealand dollar jumped to 62.04 euro cents from 61.53 cents on Friday, and rose to 89.30 Australian cents from 89.18 cents. It slipped to 43.50 British pence from 43.74 pence and dropped to 83.75 yen from 84.95 yen on Friday. The kiwi fell to 4.2420 yuan from 4.2757 yuan in local trading on Friday.

New Zealand’s two-year swap rate fell 3 basis points to 3.06 percent as at 5pm in Wellington and the 10-year swap rate fell 8 basis points to 3.85 percent.

(BusinessDesk)

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