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Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including news the NZ dollar strengthened to new highs against the US$ and Euro overnight.

The Kiwi$ rose to a two month high of 71.6 USc and a 2 year high of 52.1 euro cents as our interest rates appeared relatively more attractive than US and European rates.  This followed news that US producer prices fell 0.6%, which was more than expected.

This reinforced expectations that the US Fed Funds rate will stay “Exceptionally low” for an “extended period”.

The makes the NZ$ relatively more attractive, given our rates are expected to start rising from the middle of 2010.

The NZ$ also rose vs the euro as fears returned about the Greek situation. German officials said no rescue deal was done for a summit next week.

Meanwhile, the Bank of Japan has loosened monetary policy again by doubling a loan programme for banks because of its weak economy This also makes the yen relatively less attractive than currencies like the New Zealand and Australian dollars.

The NZ dollar rose to a 2 year high vs the Euro. It is up to 52.1 euro cents from 39 cents a year ago.  This makes life very tough for NZ exporters to the eurozone.

Finance Minister Bill English has announced that New Zealand’s government guarantee for wholesale bond issues by banks will end on April 30, following the end of a similar Australian guarantee from March 31.

The guarantee was used by New Zealand’s banks to issue NZ$10.3 billion worth of bonds under 24 guarantee certificates. There have been no payouts and the guarantee fees earned the government NZ$290 million in fees, English said.

The guarantee was set up in November 2008 in the middle of the financial crisis after Australia’s government set up a similar scheme.

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BNZ has gone looking for money overseas and succeeded, raising EUR 750 million through a seven year eurobond. At current exchange rates, this is equivalent to more than NZ$1.5 billion.

This issue is expected to cost the bank bank-bills-plus-150 bps, which it will probably feel satisfied with, given the seven year term.

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By Mike Jones

The NZD has started the week on a firm footing. The updraft from a slightly softer USD has seen NZD/USD drift back above 0.7000.

Currency markets were relatively subdued overnight. In large part, investors are waiting for further clarification on how quickly the Fed intends to wind back policy stimulus when chairman Bernanke testifies before the house later in the week.

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David Chaston details the key news in 90 seconds at 9am in association with BNZ, including news with news that Bill English has been dampening expectations about the amount of reform there will be in the upcoming budget.

He is now strongly hinting that the government is unlikely to align the personal / trust / and corporate tax rates.

In fact, finding a revenue-neutral set of reforms without making meaningful reductions in government spending is proving too hard, it seems.

There are also reports the Government is intensively polling around these issues, trying to ensure it doesn’t get its supporter base too grumpy.

And, the Government plans to create a ‘Super regulator’ for capital markets that combines the Securities Commission, the Companies Office and the disciplinary section of the NZX. All aimed at rebuilding confidence in stock markets and other securities.

In the US, there are reports overnight that manufacturers there are starting to hire, with both call-backs of laid-off workers, and new hires on the increase, as prospects improve.

However, there was also a report that new jobless claims for unemployment benefits are still rising.

And Wal-Mart, the world’s largest retailer, reported its 4th quarter earnings, and that showed a 1.6% decline in sales of its US stores. It put the decline down to less store traffic, and interestingly to deflation in the price of groceries and electronics – items that make up 40% of its trade.

But it is an enterprise that benefits from deflation – its profits jumped to record levels.

Overnight markets were quiet, with exchange rates pretty much unchanged. However, the Euro continues to take a hammering, and it is now at its lowest level against the NZD in more than a year. The UK Pound is also starting to come under pressure.

Finally, out today are the six month Crown accounts, which will give an early indication of the size of Bill English’s immediate problems.

Bernard Hickey is reporting from Wellington today and will be back on Monday.

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Bernard Hickey details the key news overnight in 90 seconds at 9am in association with BNZ, including details emerging about what was going on at Bridgecorp in the months leading up to its collapse in July 2007.

Reporters from the NZHerald and the Dominion Post were at depositions hearings at the Auckland District Court yesterday for criminal charges against Rod Petricevic and four directors of Bridgecorp. Staff were told to lie to investors about why they weren’t getting their money back, including that there were technical glitches, they reported.

One staff member wrote an email saying customers should be told Bridgecorp had no money and they were being lied to by Petricevic’s company.

Meanwhile doubts remain about support for Greece as political opposition in Germany grows. More than half of German voters want Greece thrown out of the euro. The euro fell and the New Zealand dollar rose to its strongest level against the Euro in almost a year. The European Union is the second biggest buyer of New Zealand’s exports after Australia.

Also, Dubai worries resurfaced after a debt restructure offer of just 60 cents back in every dollar.