Article – Businesswire

June 30 (BusinessWire) – The New Zealand dollar dropped below 70 U.S. cents, erasing gains from the past fortnight, amid heightened fears the world may be heading for a double-dip recession after weak Chinese data sent equity markets into a tailspin.

NZ dollar slides below 70 US cts amid fears of double-dip global recession

By Paul McBeth

June 30 (BusinessWire) – The New Zealand dollar dropped below 70 U.S. cents, erasing gains from the past fortnight, amid heightened fears the world may be heading for a double-dip recession after weak Chinese data sent equity markets into a tailspin.

China’s Shanghai Composite index sank 4.3% yesterday after the New York-based researcher Conference Board revised down its outlook for world’s third biggest economy. The downbeat assessment of the country that’s been driving the global recovery sent stock-markets down worldwide, as investors get more nervous about a possible double-dip recession. Weak consumer confidence data in the U.S. did nothing to quell these fears, and the Standard & Poor’s 500 index dropped 3.1%. The kiwi dollar shed two weeks of gains in the downturn, which coincides with year-end for many investors, after weak business confidence and building data earlier this week.

“The fall in the Shanghai Composite started the whole ball rolling, and local data was pretty weak, with the National Bank Business Survey on Monday pretty crappy and building consents bad as well,” said Tim Kelleher, vice president of institutional banking and markets at Commonwealth Bank of Australia. “The China slowdown affects most things – all commodity currencies got hit, including the kiwi.”

The kiwi sank to 69.27 U.S. cents from 69.58 cents yesterday, and declined to 66.90 on the trade-weighted index of major trading partners’ currencies from 67.14. It dropped to 61.32 yen from 61.82 yen yesterday, and gained to 81.54 Australian cents from 81.22 cents. It dropped to 56.82 euro cents from 57.10 cents yesterday, and fell to 66.90 pence from 67.14 pence.

Kelleher said the currency may trade between 68.50 U.S. cents and 69.50 cents, and will follow global sentiment with little on the local data front.

Europe’s debt crisis will rear its head over the coming days, with the region’s banks due to repay some 442 billion euros of one-year loans by Thursday to the European Central Bank which were offered to boost liquidity. Spanish lenders have been calling for the regulator to push out the deadline, and a three-month bond tender by the ECB tomorrow will attract a lot of attention from investors.

Fonterra Cooperative Group’s owners will vote on a proposal to restructure the company and let them trade shares among themselves to help boost the capital available to the world’s biggest dairy exporter, though the meeting isn’t expected to have much impact on financial markets.

(BusinessWire)

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