NZ dollar rises as German business confidence surges

NZ dollar rises as German business confidence surges

By Paul McBeth

Jan. 24 (BusinessDesk) – The New Zealand dollar gained as investors’ appetite for higher-yielding, or riskier, assets was whetted by record-high business confidence in Germany, allaying fears of a European debt meltdown.

Stocks in Europe and on Wall Street gained after the German Ifo institute’s business climate index reached its highest level since records began for a reunified Germany in 1991. Investors eschewed the greenback in favour of bigger returns, with the Dollar Index, a measure of the U.S. dollar against a basket of currencies, falling 0.7% to 78.12.

“Some confidence is re-emerging in the Euro-zone” on the back of Germany’s strength,” said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. “There was a big increase in U.S. dollar selling, mainly against the euro” and the kiwi was dragged higher, he said.

The kiwi rose to 75.85 U.S. cents from 75.46 cents on Friday in New York, and increased to 67.82 on the trade-weighted index of major trading partners’ currencies from 67.71. It gained to 62.66 yen from 62.50 yen last week, and was little changed at 76.58 Australian cents from 76.52 cents. It fell to 55.74 euro cents from 55.91 cents on Friday in New York, and was little changed at 47.39 pence from 47.40 pence.

Kelleher said the currency may trade between 75.60 U.S. cents and 76.20 cents today, with the regional holiday in Wellington likely to keep local markets quiet.

Though Europe’s debt woes are back on the periphery of traders’ concerns, Ireland is back in the spotlight with Prime Minister Brian Cowen forced to step down as leader of Fianna Fail, while staying on as premier. The resignation came after Cowen failed to secure the backing of his Green Party coalition partner. The Greens subsequently withdrew from government.

(BusinessDesk)

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