The New Zealand dollar dipped below 63 euro cents for the first time in more than a week amid speculation Greek officials and private creditors are preparing the final draft of a budget and structural measures needed to free up the nation's second aid package.
The New Zealand dollar fell to 62.96 euro cents just before 8am this morning from 63.89 cents yesterday at 5pm, and recently traded at 63.02 cents. The kiwi was little-changed at 83.39 US cents from 83.33 cents yesterday.
Investors flocked to the euro, ending the kiwi's near-record highs against the 17-nation currency, amid reports Greek officials are working on a draft agreement for the government's bailout conditions. Greek Prime Minister Lucas Papademos and party chiefs have already agreed to make further cuts this year equal to 1.5 per cent of gross domestic products, but are yet to close the gap between private investors' demands as the nation seeks a 130 billion euro rescue package.
"Rumblings of an impromptu EU finance ministers' meeting Wednesday/Thursday and a Greek parliamentary vote on Sunday were enough to keep the positive sentiment going," said Mike Jones, currency strategist at Bank of New Zealand. "Chatter that Greece is a step closer to the next tranche of European Union and International Monetary Fund bailout cash solidified investors' risk appetite and lit a rocket under the euro," and sapped demand for the kiwi cross-rate, he said
Across the Atlantic, US Federal Reserve chairman Ben Bernanke warned the unemployment rate understated the weakness in the country's labour market. Investors had responded positively to better-than-expected US data, propelling the kiwi dollar to new a five-month high. Bernanke will speak on Friday at the 2012 National Association of Homebuilders International Builders' Show on "Housing Markets in Transition."
