NZ dollar holds above 75 US cts on global oil supplies

NZ dollar holds above 75 US cts on international effort to secure oil supply

By Paul McBeth

Feb. 28 (BusinessDesk) – The New Zealand dollar held above 75 U.S. cents amid international efforts to secure the global oil supply as Libyan unrest continues to escalate.

The price of Brent crude oil dropped 1.4% to US$112.43 a barrel after the U.S., Saudia Arabia and the International Energy Agency said they can compensate for any disruption to world oil supplies as Libya’s output was cut by as much as two-thirds. That helped stoke investors’ appetite for higher-yielding, or riskier, assets, with the Chicago Board Options Exchange’s Volatility Index, or VIX, known as Wall Street’s ‘fear gauge’, falling 12% to 19.22. Weaker estimates for American economic growth sapped support for the greenback, and underpinned demand for commodity-linked currencies, such as the New Zealand and Australian dollars.

“Risk sentiment improved as the recent oil price rise was capped,” said Imre Speizer, market strategist at Westpac Banking Corp. “The bias for the kiwi this week is lower – the rally at the moment is corrective” after the currency sank as much as 200 basis points after the Christchurch earthquake, he said.

The kiwi slipped to 75 U.S. cents from 75.19 cents on Friday in New York, and declined to 66.38 on the trade-weighted index of major trading partners’ currencies from 66.50. It fell to 61.31 yen from 61.60 yen last week, and dropped to 73.85 Australian cents from 74.24 cents. It rose to 54.56 euro cents from 54.41 cents on Friday, and was little changed at 46.49 pence from 46.59 pence.

Speizer said the currency may trade between 74.80 U.S. cents and 75.50 cents today, with any rally capped at the top end of the range.

Markets will probably ignore local data, such as the National Bank Business Outlook today, and will look for more information on the cost of the 6.3 magnitude Christchurch earthquake, which has killed at least 147 people.

Ireland’s general election was won by the Fine Gael party, raising concerns the new administration may not stick to the previous government’s austerity package to deal with its unmanageable debt.

(BusinessDesk)

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