NZ dollar falls before OCR review amid Middle East tensions

NZ dollar falls ahead of OCR review as Middle East tensions sap risk appetite

By Jason Krupp

March 7 (BusinessDesk) - The New Zealand dollar fell as increased fighting in Libya sapped investors’ risk appetite ahead of the Reserve Bank’s review of monetary policy, which is expected to result in a cut to the official cash rate.

Reports of heavy fighting between the army and rebels in Libya have driven up the price of crude oil, with Brent crude last trading at US$116 a barrel. The turmoil in the Middle East outweighed stronger jobs numbers in the U.S., where employers added 192,000 jobs in February, according to the U.S. Labor Department. That beat a consensus forecast compiled by Reuters of a gain of 185,000.

"Payrolls in the end had minimal impact," said Imre Speizer, market strategist for Westpac Banking Corp. "The dominant theme was Libya. With oil prices up risk appetite fell, hurting risk currencies like the kiwi."

The New Zealand dollar fell to 73.64 U.S. cents from 73.84 cents yesterday, and dropped to 64.92 on the trade-weighted index of major trading partners’ currencies from 65.11. It fell to 72.70 Australian from 72.82 cents, and fell to 60.56 yen from 60.80 yen previously. It declined to 52.62 euro cents from 52.91 cents and dropped to 45.23 pence from 45.34 pence.

Speizer said global themes would provide early leads for the kiwi dollar, but the market was largely looking ahead to Thursday when the Reserve Bank of New Zealand is expected to cut the official cash rate by 50 basis points to 2.5% in response to the 6.3 magnitude earthquake in Christchurch which has devastated the region and caused billions of dollars of damage.

He said the currency may trade in a range of between 74 U.S. cents and 72.70 cents today.

(BusinessDesk)

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