Article – BusinessDesk

Jan. 31 (BusinessDesk) – The New Zealand dollar shrugged off political unrest in Egypt even as stocks on Wall Street and in Europe sank, and held above 77 U.S. cents on rising food prices.

NZ dollar shrugs off Egyptian unrest, holds above 77 US cts on food prices

By Paul McBeth

Jan. 31 (BusinessDesk) – The New Zealand dollar shrugged off political unrest in Egypt even as stocks on Wall Street and in Europe sank, and held above 77 U.S. cents on rising food prices.

The Standard & Poor’s 500 Index dropped 1.8% as violent protests in Egypt over high unemployment and the rising cost of food stokes pressure for President Hosni Mubarak to resign. Mubarak appointed Omar Suleiman as the nation’s first vice-president of his 30-year rule, though local billionaire Naguib Sawiris, who chairs Orascom Telecom Holding, told Bloomberg that probably won’t be enough to satisfy protesters. The Egyptian pound weakened to 5.855 per U.S. dollar from 5.832 on Friday in New York. The kiwi dollar shrugged off investor apathy for higher yields as its exposure to soft commodities kept demand for the currency well-bid.

“Ordinarily the kiwi would’ve got smacked on the global events, but the fact is that it’s held up well on solid underlying demand,” said Khoon Goh, head of market economics and strategy at ANZ New Zealand. Food prices have “continued on its merry march upwards, and the kiwi is acting as a proxy play for soaring commodity prices.”

The kiwi slipped to 77.12 U.S. cents from 77.23 cents on Friday in New York, and was little changed at 68.94 on the trade-weighted index of major trading partners’ currencies from 68.90. It declined to 63.21 yen from 63.84 yen last week, and was little changed at 77.90 Australian cents from 77.88 cents. It rose to 56.74 euro cents from 56.31 cents last week, and increased to 48.68 pence from 48.56 pence.

World food prices rose 4.4% to a record in December, based on an index of 55 food commodities tracked by the UN’s Food and Agriculture Organisation.

Goh said the currency may trade between 76.80 U.S. cents and 77.40 cents today, with local building consents and trade data out today ahead of employment data tomorrow and on Thursday.

The U.S. economy grew an annualised 3.2% in the 12 months through Dec. 31, falling short of an expected 3.5%, on a slow-down in inventories. Still, consumer spending was ahead of expectations, adding to optimism the world’s biggest economy is on the recovery.

(BusinessDesk)

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