NZ dollar rebounds as Cyprus bailout tempered
The New Zealand dollar regained ground against the greenback overnight, as officials meet this morning to try to water down the harsh conditions of the €10 billion ($15.7b) Cyprus bailout.
The kiwi recently traded at US82.49 cents, up from US82.32c at 5pm yesterday, while on the Trade Weighted Index of major trading partners' currencies it was unchanged at 75.70.
The weekend's decision to bail out the Cypriot banks caused turmoil in global markets, with risk sentiment plummeting on news that depositors would likely lose 10 per cent of their account balances in a one-off levy.
Cash machines were quickly drained dry as citizens attempted a run on the banks ahead of a scheduled bank holiday on Monday.
Westpac market strategist Imre Speizer said traders were watching the headlines closely as officials meet this morning to try to amend the controversial bailout conditions.
"After the initial shocks about Cyprus, the officials are going back to tweaking the plan - watering it down a bit for the small depositors, which may reduce the risk of capital flight somewhat," he said.
While risk appetites had recovered somewhat overnight, it was unknown what the tweaks might actually comprise.
"I'm not sure whether that'll be enough to put this scare back in its box," Speizer said.
Closer to home, investors will be watching for the release of the Reserve Bank of Australia's minutes this morning and the Fonterra auction overnight.
On the crosses, the kiwi recently traded at 79.32 Australian cents, down from 79.45 at 5pm yesterday and 78.73 yen, down from 77.96 yen. It opened at 63.70 euro cents, down slightly from 63.77 euro cents, and 54.63 British pence, up from 54.49p earlier.
Speizer expected the kiwi to trade in a range between US82.20c and US82.80c on the day.