THE New Zealand dollar has continued with its strengthening trend up until Friday last week when news of the proposed Cyprian Bailout was released. The so called Kiwi began the week on a rate of 1.8146 to the British Pound on Monday and the week closed on a bullish run to end on an average of 1.8074 on Friday. Over the weekend the Kiwi weakened substantially to open on 1.8268 on Monday.
The weekend’s decision to bail out the Cypriot banks caused disarray in global markets. Risk sentiment in the market place plummeted on news that depositors would likely lose 10 per cent of their account balances in a once-off levy. Such a decision reinforced and abruptly reminded investors that the Eurozone Crisis is far from over and caused investors to stray away from emerging currencies such as the Kiwi.
“After the initial shocks about Cyprus, the officials are going back to tweaking the plan – watering it down a bit for the small depositors, which may reduce the risk of capital flight somewhat,” as reported by Imre Speizer in the Business Day. Risk appetite has recovered somewhat after news of such adjustments hit the market.
Closer to home investors kept a close eye on The Reserve Bank of Australia’s (RBA’s) minutes released early on Tuesday. The results of which met market participant’s expectations and left the Kiwi little changed.
The focus this week now turns to local data, with fourth-quarter current account data due Wednesday and growth domestic product data due on Thursday.
Composed by Saskia Johnston
Exchange rates as of 19 March 2013 at 9.36am GMT.
GBP / NZD: 1.830
EUR / NZD : 1.567
USD / NZD : 1.213
AUD / NZD : 1.257
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