NZ dollar extends drop as Asian stock markets fall

Article – BusinessDesk

Feb. 21 (BusinessDesk) – The New Zealand dollar extended its decline as stocks across Asia followed a souring global mood with uncertain elections in Italy and divisions appearing in the Federal Reserve’s strategy to buy unlimited bonds.

NZ dollar extends drop as Asian stock markets fall amid souring global mood

By Paul McBeth

Feb. 21 (BusinessDesk) – The New Zealand dollar extended its decline as stocks across Asia followed a souring global mood with uncertain elections in Italy and divisions appearing in the Federal Reserve’s strategy to buy unlimited bonds.

The kiwi fell to 83.38 US cents at 5pm in Wellington from 83.57 cents at 8am and 84.08 cents yesterday. The trade-weighted index decreased to 76.23 from 76.33 yesterday.

Stocks in Asia fell with China’s Shanghai Composite Index down 2.7 percent, Japan’s Nikkei 225 index falling 1.3 percent, and Australia’s S&P/ASX 200 index down 2 percent. Market sentiment has turned around since US stocks touched five-year highs as investors get nervous about this weekend’s Italian election that could throw a spanner into Prime Minister Mario Monti’s austerity drive.

Today’s release of minutes to the latest Federal Open Market Committee meeting did to give them confidence, showing division over the pace of monthly purchases, and some officials raised the potential costs of the eventual exit from the quantitative easing programme.

“There’s a bit or nervousness after it looked like it was all one-way traffic,” said Imre Speizer, market strategist Westpac Banking in Auckland. “If we break below 83 US cents then it’s more sinister, the trend is broken and we go lower to 81 at a minimum.”

New Zealand’s currency tumbled yesterday after Reserve Bank governor Graeme Wheeler said the kiwi was over-valued and reminded the market of his criteria for intervention. The currency has been in favour in recent months as investors look for higher interest rates in growing economies.

The kiwi rose to 62.88 euro cents from 62.67 cents yesterday, and increased to 54.81 British pence from 54.43 pence. It advanced to 81.43 Australian cents from 81.14 cents, and traded at 77.90 yen from 78.54 yen.

(BusinessDesk)

Content Sourced from scoop.co.nz
Original url