Kiwi stable as all eyes on Cyprus

20:32, Mar 20 2013

The New Zealand dollar was unchanged against the greenback this morning, despite Cyprus' ongoing debt woes, and the announcement that the United States Federal Reserve would continue its hefty US$85 billion (NZ$103b) per month bond-buying stimulus.

The kiwi opened at US82.27 cents, unchanged from 5pm yesterday, and the Trade Weighted Index of major trading partners' currencies was also unchanged at 75.80.

Despite the delicate state of the eurozone the euro rose marginally overnight.

Cyprus is seeking Moscow's help after parliament voted down the eurozone's plan for a EURO10b (NZ$15.7b) bailout on Tuesday, which would have included a levy on bank deposits to raise EURO5.8b as part of a bailout scheme.

Cyprus pleaded for a new loan from Russia on Wednesday to avert a financial meltdown, after the debt-laden island's leaders rejected the terms of a bailout from the EU, raising the risk of default and a bank crash.

ANZ Senior Manager FX Sam Tuck said the market was probably underplaying the risks.

'The market seems to be quite sanguine about Cyprus,'' he said, adding that the situation there was, however, overshadowing other global events.
The Federal Reserve's conservative plan to continue buying bonds at US$85b a month in order to stimulate the economy was expected, and had little effect on the global markets, Tuck said.

Locally, GDP for the December quarter will be released today. Tuck expects the economy to have grown 0.9 per cent.

On the crosses, the kiwi recently traded at 79.21 Australian cents, down from A79.28c at 5pm yesterday, and at 78.86 yen, up from 78.21 yen. It opened at 63.54 euro cents, down from 63.90 euro cents at 5pm, and 54.42 British pence, marginally down from 54.52p.

Tuck expected the kiwi to be well supported at the US82c mark, and trade between US81.90c and US82.70c.