NZ dollar falls to week low as investors shun riskier assets
Already fragile global sentiment has taken another knock.
Hot Topic
Long reads
The New Zealand dollar fell to a week low as investors eschewed riskier investments on concern about the global economic outlook amid weak inflation as oil prices fall.
The kiwi touched 77.09 US cents and was trading at 77.18 cents at 8am in Wellington from 77.86 cents at 5pm yesterday. The trade-weighted index fell to 78.65 from 79.24 yesterday.
Investors are favouring safe haven currencies such as the yen and eschewing riskier bets like the kiwi on concern about global economic growth. Oil prices fell to near six-year lows as OPEC producer the United Arab Emirates reiterated the group wouldn't reduce output to bolster prices. British inflation fell to an annual 0.5 percent in December, the joint lowest on record, helped by cheaper fuel prices, suggesting interest rates will remain lower for longer. Meanwhile speculation is increasing that the European Central Bank will decide to start a sovereign bond-buying programme at its meeting next week.
"Global sentiment, which was already fragile, was given another knock last night by a further drop in oil prices, the UK CPI which raised doubts about Bank of England interest rate rises this year, and increasingly confident predictions that the ECB will actually do something next week," said Peter Cavanaugh, client advisor at Bancorp Treasury Services. "The markets are focused much more on the risk side of the risk-reward balance. Whilst New Zealand offers a great reward, it does come with some risks and the markets are looking to avoid risk at the moment."
The New Zealand dollar touched a four-week low of 90.69 yen, and was trading at 90.83 yen at 8am from 91.84 yen yesterday.
The local currency fell to 94.65 Australian cents from 95.10 cents yesterday, declined to 50.92 British pence from 51.29 pence and slipped to 65.58 euro cents from 65.72 cents.
(BusinessDesk)
Tina Morrison
Wed, 14 Jan 2015
Wed, 14 Jan 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
NZ dollar falls to week low as investors shun riskier assets
44372