Greek Crisis Makes NZ Dollar Reach Fresh Lows

Publish Date
Monday, 6 July 2015, 10:49AM
Getty Images.

Getty Images.

The New Zealand dollar fell to a fresh five-year low as investors exited riskier assets in favour of safe havens after Greeks look to have rejected austerity measures that would give them access to bailout money.

The kiwi touched 66.40 US cents, and was trading at 66.58 cents at 8am in Wellington, from 66.93 cents at the New York close and 67.23 cents in Wellington on Friday. The trade-weighted index slid to 70.25 from 70.61 on Friday.

The euro dropped after initial results showed Greeks voted on Sunday to reject the terms of a bailout with the country's creditors, raising concerns about the country's financial future.

With about 60 per cent of the votes counted, official figures show 61 per cent of Greeks rejected the bailout offer.

The uncertainty prompted investors to sell higher risk assets such as the kiwi and favour more liquid, stable currencies such as the US dollar and the yen and the perceived safety of government bonds.

"The Greeks look to have voted no, souring global risk sentiment," ANZ Bank New Zealand senior economist Philip Borkin and senior FX strategist Sam Tuck said in a note.

"Sentiment is driving 'risk' currencies lower and safe-havens higher."

Graphic: Bloomberg

Concern about a slump in Chinese equities is also weighing on the New Zealand and Australian dollars, ANZ said. Chinese authorities at the weekend announced that the top 21 brokerage firms were to form a fund to support blue-chip stocks.

The kiwi will probably trade between 66 US cents and 67.50 cents today, ANZ said.

In New Zealand today, data on new vehicle registrations for June may be released.

The Motor Industry Association provisional data shows it may be the biggest June month on record for new vehicles, with close to 13,000 registrations.

MIA records show only four occasions when monthly sales have previously broken 13,000.

The New Zealand dollar advanced to 89.23 Australian cents from 88.58 cents on Friday ahead of tomorrow's Reserve Bank of Australia meeting.

The local currency touched 80.84 yen, its lowest level since November 2013, as investors favoured the perceived safety of the yen. It was trading at 81.09 yen at 8am from 82.75 yen on Friday.

The kiwi slumped to 42.69 British pence, its lowest level since September 2009, and was trading at 42.82 pence at 8am from 43.06 pence on Friday. It was little changed at 60.53 euro cents from 60.58 cents on Friday. 

- NZ Herald/BusinessDesk