By Paul McBeth
The New Zealand dollar fell in the local trading session as investors await signs that European leaders will agree to a bigger bail-out fund for the region’s indebted nations.
The kiwi fell to 78.48 U.S. cents at 5pm from 79.11 cents at 8am, and was up from 78.67 cents yesterday.
Investors are continuing to wait for traction to boost the size of the European Financial Stability Fund to gain some ground among the region’s powerhouses, and have largely kept on the sidelines in the local trading session.
Europe’s woes are likely to hog the headlines for the rest of the year, as protracted negotiations over whether to increase the leverage of the fund get drawn out and make it more difficult to get a bigger rescue package through the parliaments of the region’s 17 members.
“Everyone thought Europe was done and dusted, but more argy bargy showed we’re not done, so we’re awaiting European comments,” said Imre Speizer, market strategist at Westpac Banking Corp.
“Even with this short-term positivity, I can see nothing letting up and we would still be selling the kiwi on bounces.”
Finance Minister Bill English returned from a trip to the U.S. to meet policy makers including U.S. Federal Reserve chairman Ben Bernanke, and described the mood as “ugly”. Still, he told reporters he doesn’t expect a significant revision to Treasury’s growth forecasts. See more here in Alex Tarrant's report.
The kiwi fell to 69.56 on the trade-weighted index from 69.74 yesterday, and was little changed at 79.55 Australian cents from 79.62 cents.
It traded at 60.08 Japanese yen at 5pm from 60.06 yen yesterday, and slipped to 57.86 euro cents from 58.12 cents. The currency fell to 50.20 pence from 50.50 pence yesterday.
(BusinessDesk)
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CRASH 2 EXCLUSIVE: GERMAN REJECTION OF G20 RESCUE PLAN ‘REFLECTS TRIUMPH OF NATIONAL SELF-INTEREST’ The Slog goes behind the scenes in the eurozone:
Merkel fights for survival
Trichet ‘never up for G20 plan’
Greek progress backsliding again
Portugal now ‘critical’
France focused on bank survival
G20 ‘fantasy’ seen as ‘dead in the water’
The Slog’s German banking source was proved right yet again last night, when the Germans described The Big EU Rescue as ‘stupid’. I think he was being Germanically correct when he told me last week “this will not play well in Berlin” in relation to the Geithner/G20 Plan; but that’s OK, because Geli Merkel has cleared up any potential misunderstanding. And if my source is right about new developments in Berlin, then we’re in very deep doo-doo indeed. He begins:
“Actually you know, Merkel and Schauble’s outright rejection of the 2-trillion-euro G20 suggestion has saved the face of [EU Central Bank President] Jean-Claude Trichet. If America wasn’t prepared to get involved in a sort of Marshall Plan, then Monsieur Trichet did not have the stomach for this idea. He is a sharp man, Trichet: he kept quiet knowing the idea was mad, and would run out of road very quickly.
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