NZ dollar falls against yen amid G-7 selling, Libya strikes

NZ dollar falls against yen, steady vs greenback on G-7 yen intervention, Libya strikes

By Jason Krupp

March 21 (BusinessDesk) - The New Zealand dollar dropped against the yen and was little changed against the greenback from its close on Friday in New York as currency markets weighed the impact of the Group of Seven nations’ intervention in Japan’s currency and the UN-led airstrikes in Libya.

Last week, central banks from G-7 countries started selling their yen holdings as part of an agreement to help stabilise the Japanese currency after speculation of massive offshore fund repatriations drove the currency to record levels in the wake of the ongoing nuclear crisis. The impact on energy markets from the unfolding conflict in North Africa is also likely to be closely watched, after UN-led forces bombed Libya's air defenses over the weekend to impose a no-fly zone over the country. Oil was last trading at US$114.49 a barrel, down from US$116.05 on Friday.

"Markets on the currency side are waiting to see if the central bank action from the G-7 meeting will continue today," said Alex Sinton, a senior dealer at ANZ New Zealand. "It's fairly clear they want to stop the yen from strengthening, but whether they want to weaken it remains to be seen".

The kiwi rose to 72.89 U.S. cents from 72.86 cents on Friday in New York, and fell to 58.79 yen from 59.64 yen. It dropped to 64.18 on the trade-weighted index of major trading partners’ currencies from 64.33. It gained to 73.38 Australian cents from 73.30 cents last week. The kiwi dropped to 51.54 euro cents from 51.77 cents on Friday, and sank to 44.90 pence from 45.07 pence.

Locally, the market will be waiting for the release of current account and gross domestic product numbers for the fourth quarter on Wednesday. GDP is forecast to have grown by 0.2% in the three-months to Dec. 31 compared to a decline of 0.4% in the previous period, according to a Reuters poll. The current account deficit, as a percentage of GDP, improved to 2.4% from 3.1% three months earlier.

Sinton said he expects the kiwi dollar to trade between a range of 72.85 U.S. cents and 73.59 cents today.

(BusinessDesk)

© Scoop Media