Dollar edges lower as investors digest Chinese devaluation
Kiwi decreased to 65.42USc at 8am in Wellington from 65.52USc yesterday.
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The New Zealand dollar edged lower in northern hemisphere trading as investors weigh the impact of China's currency devaluation yesterday, fuelling concerns about the world's second biggest economy and the ripple effects on its trading partners.
The kiwi decreased to 65.42USc at 8am in Wellington from 65.52USc yesterday, having shed more than half a cent after the People's Bank of China acted. The local currency traded at 4.1303 yuan from 4.1396 yuan yesterday, having jumped from 4.1033 yuan the day earlier.
The Australian and New Zealand dollars dropped sharply after China's central bank set the midpoint for the yuan at 6.2298 per dollar, down from the previous day's fix of 6.1162 per dollar, and said it was aiming for 2% depreciation. China is New Zealand's biggest trading partner, and second biggest export destination behind Australia, meaning a weaker yuan will crimp export receipts in the world's most populous nation.
"So surely, but slowly these structural changes in China's financial liberalisation have clear implications for New Zealand's financial variables, asset prices and demand for our exports and tourism sectors," ANZ Bank New Zealand agri economist Con Williams and senior FX strategist Sam Tuck said in a note. "Markets sold NZ dollars on the view that the devaluation reflects a weaker Chinese economy and reduces Chinese purchasing power. The path of the renminbi is now vital for the NZ dollar."
The devaluation of the yuan eroded investors' appetite for riskier assets, prompting a selloff in equity markets in Europe and the US, and also pushed commodity prices lower, which further weighed on the kiwi dollar.
The local currency traded at 89.50Ac form 89.44Ac yesterday, and increased to ¥81.82 from ¥81.68. It fell to 59.22 euro cents from 59.67 cents yesterday, and was little changed at 41.97 British pence from 42.07p. The trade-weighted index was little changed at 70.28 from 70.32 yesterday.
(BusinessDesk)
Paul McBeth
Wed, 12 Aug 2015
Wed, 12 Aug 2015
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Dollar edges lower as investors digest Chinese devaluation
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