Jan. 11 (BusinessDesk) – The New Zealand dollar tumbled against the euro after European Central Bank President Mario Draghi said the euro-zone economy should gradually recover later this year and signalled there was no interest at the ECB in cutting interest rates.
The kiwi dollar dropped to 63.68 euro cents from 64.37 cents at 5pm in Wellington yesterday. The local currency gained to 84.46 US cents from 84 cents.
The ECB left its main refinancing rate at a record-low 0.75 percent in a unanimous decision and Draghi said the accommodative policy setting should work its way through the economy, and global demand should strengthen. Helping add to euro-zone sentiment, Spain sold 5.8 billion euros of debt, more than it had targeted. Traders, though, said Europe isn’t out of the woods yet.
“Reality will kick home to Europe,” said Alex Sinton, senior dealer at ANZ New Zealand. “Draghi is talking about things turning positive in late 2013 – I don’t think things will be back that early. The kiwi will be supported.”
The New Zealand dollar may trade in a range of 84.20 US cents to 84.70 cents today and may challenge 85 cents in the near term, though there are “a lot of sellers” at that level, Sinton said.
The kiwi dollar broke through 84 US cents yesterday when Chinese trade data showed exports jumped 14 percent last month. Chinese figures will feature again today with the consumer price index expected to have gained to an annual 2.3 percent in December from 2 percent a month earlier.
The trade-weighted index was at 75.64 from 75.67 yesterday. The kiwi dollar climbed to 74.42 yen from 73.96 yen and rose to 79.71 Australian cents from 79.65 cents.
The local currency fell to 52.25 British pence from 52.42 pence.