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Home / Business / Companies / Banking and finance

NZ dollar slips vs. euro as breakdown in Greek debt negotiations stokes exit fears

BusinessDesk
15 Jun, 2015 09:05 PM3 mins to read

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File photo / NZ Herald

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The New Zealand dollar fell against the euro even as the latest breakdown in negotiations between Greece and its European creditors stoked concerns the Mediterranean nation will end up leaving the shared currency and monetary union.

The kiwi fell to 61.97 euro cents at 8.30am from 62.12 cents yesterday. It was little changed at 69.92 US cents from 69.97 cents.

Talks between Greece and its European creditors over the 1.6 billion euros payment due at the end of the month broke down again, and unless European leaders see a better deal in front of them on Thursday at a finance minister forum, they may put an ultimatum before the Mediterranean nation, according to media reports.

European Central Bank president Mario Draghi was among the leaders stepping up rhetoric, saying a "strong and comprehensive" agreement is needed very soon, tempered by comments that a Greek default would be uncharted territory and European leaders need to be realistic.

"So far the Greek government has held firm, with PM (Alexis) Tspiras noting they will wait patiently until 'the institutions adhere to realism'. This looks set to go down to the wire," ANZ Bank New Zealand senior economist Mark Smith and senior FX strategist Sam Tuck said in a note.

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"European politics continues to degrade as a Greek impasse looks increasingly likely however EUR strengthened as markets ignore Greece."

The euro was bolstered by a strong EU trade surplus, and US data disappointed investors, weighing on the greenback.

Markets are awaiting the Federal Open Market Committee's upcoming review of monetary policy, where they expect Federal Reserve chair Janet Yellen to give a firmer idea of when the world's biggest central bank will start raising interest rates.

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No local data is scheduled for release today, though traders will watch the upcoming dairy auction to see if milk prices continue their period of weakness.

Low global dairy prices are weighing on New Zealand's terms of trade, and were cited as a key reason for the Reserve Bank's interest rate cut last week.

Reserve Bank of Australia assistant governor financial markets Guy Debelle will deliver a speech in Sydney today, and the central bank also publishes the minutes to its last meeting, both of which will be watch to gauge the strength of Australia's economy.

The kiwi fell to 90.01 Australian cents at 8.30am from 90.32 cents yesterday.

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The local currency gained to 86.27 yen from 86.03 yen yesterday, and was little changed at 44.81 British pence from 44.83 pence yesterday.

The trade-weighted index was at 72.93 from 72.86 yesterday.

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