NZ dollar gains after Wheeler named to RBNZ, EU summit looms

NZ dollar gains after Wheeler tapped to replace Bollard as RBNZ governor

By Hannah Lynch

June 26 (BusinessDesk) - The New Zealand dollar rose in local trading after Graeme Wheeler was named as the next central bank governor and markets prepare for the European Union summit in Brussels this week.

The New Zealand dollar rose to 78.85 at 5pm from 78.67 US cents just before 8am this morning. The trade weighted index edged up to 71.64 from 71.60.

Wheeler, a former executive at the World Bank, will replace Alan Bollard as governor of the Reserve Bank when his second five-year term ends on Sept. 25. Bollard has held the official cash rate at a record-low 2.5 percent since March 2011. Traders are pricing in a 62 percent chance of a rate cut before the end of the year, according to Bloomberg.

"There is certainty a bit of a surprise in the market," said Chris Weston, market strategist at Markets in Sydney. "Personally I don't think we will see a sell-off of in the kiwi because he is governor - the fate of the kiwi dollar still remains in the hands of Europe."

Markets are positioning themselves ahead of the EU's 20th summit since Greece's financial meltdown ratted the euro. The two-day summit won’t even be attended by Greek Prime Minister Antonis Samaras who is in hospital recovering from an eye operation.

The New Zealand dollar rose to 63.05 euro cents from 62.91 cents at 8am after Moody’s Investors Service downgraded 28 Spanish banks as the nation's debt and real-estate loans continues to rise.

Some, 12 lenders were lowered to junk status, while six banks were downgraded by four levels and 10 by three grades. The rest got one- and two-tier declines.

The New Zealand dollar was little changed on Australian cents from 78.64 cents and was largely unchanged on 62.69 yen from 62.72 yen. The kiwi edged up to 50.60 British pence from 50.52 pence.

(BusinessDesk)

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