MONDAY the 21st May saw the New Zealand Dollar trade at 2.064 against the British Pound. It was also bid at 1.306 against the US Dollar.
Fears that the Euro leaders would fail to resolve the debt crisis all but halted appetite for riskier assets. The sentiment sent investors fleeing from currencies such as the Australian Dollar and Kiwi, resulting in the Aussie slipping against 15 of its 16 major counterparts, whilst the Kiwi fell to levels last seen in December 2011.
On Wednesday, Hans Kunnen of St George Bank in Sydney said “We’re just lost in this fog of Europe, and speculation regarding tonight’s meeting of European leaders is all over the place.” The Greek Prime Minister, Lucas Papademos, attempted to quell fears in the region by stating that the nation’s exit from the Euro bloc is “unlikely to materialize”. Despite leaders’ attempts to maintain calm, the Kiwi still declined 2% this year, 1% less than the Aussie’s 3% decline over the same period.
On Thursday, however, speculation arose that the currency’s sharp decline was an excessive reaction. Local data was released, showing that the nation’s exports exceeded imports by NZ$355 million, helped bolster demand for the currency. This also helped limit losses after weak Chinese economic data was released- hinting at a stall of the economy.
For the week ahead, eyes will be glued to Europe. Greek pre-election polls are expected to shed some light on the future of the nation and its’ effects on the rest of the world. Spain will also be in the spotlight, as fears mount that it too will require a bailout from the European Central Bank.
Exchange rates as of 09h25, 28th May 2012
Composed by Jesse Crooks
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