The New Zealand dollar was little changed, remaining
on the sidelines as currency markets focused on the euro after Standard & Poor's downgraded Greece's credit rating further.
The euro fell to US$1.4344 from US$1.4433 yesterday, it fourth decline in a row, after ratings agency S&P slashed Greece's long-term credit rating
to B from BB-, a level on par with Belarus at the bottom of the euro zone rankings.
That saw yields on Greek 10-year bonds climb 21 basis points to 15.7 per cent, effectively double what they were a year ago when the indebted nation first accepted the bailout, according to Bloomberg.
"There was nothing positive on the euro front and we benefitted by being on the sidelines," said Alex Sinton, a senior dealer at ANZ New Zealand.
"This debt situation, even if economic conditions turn around dramatically, will not go away in a hurry and anyone who thinks that is the case is misguided."
The kiwi recently traded at 79.33 US cents, little changed from 79.41 cents yesterday, and rose to 68.28 on the trade-weighted index of major trading partners' currencies from 68.20.
It rose to 73.69 Australian cents from 73.59 cents previously, and fell to 63.66 yen from 64 yen.
It climbed to 55.29 euro cents from 54.99 cents yesterday, and rose to 48.42 pence from 48.44 pence.
Traders will be watching for the release of the Australian budget today, when Treasurer Wayne Swan is expected to announce a number of spending cuts to address the country's widening government deficit.
However, his medium term outlook may show government finances returning to surplus from 2012 onwards, as Australia continues to ride the mining boom.
"The Australian budget, relative to the rest of the world will be quite spectacular," Sinton said.
"We'll benefit off the coat tails off of that until we present our own budget picture, which can't be good given the Christchurch earthquake."
The kiwi dollar may trade in a range of between 78.95 US cents and 79.70 cents, Sinton said.
- NZPA
