NZ dollar sags under weight of coronavirus fears

The kiwi was trading at 65.04 US cents at 5pm. Photo / File

The New Zealand dollar eased further with anxiety about the coronavirus crisis all but crowding out other data investors usually focus on.

That said, the New Zealand dollar was temporarily buoyed by better than expected trade data for December but all sparks were extinguished almost three hours later when poor Australian trade numbers were published.

See live rates for the NZ-US $ below. Click for more information:

​

The kiwi was trading at 65.04 US cents at 5pm in Wellington from 65.33 cents at the same time yesterday. The trade-weighted index was at 71.89 from 72.04.

Deaths in China from the coronavirus rose to 170 from 132 yesterday with 95 per cent of them in the Hubei province where the virus was first detected in December. The number of those infected rose to 7,711 from nearly 6,000 yesterday.

All eyes are on the news about the virus, said Peter Cavanaugh, the senior client adviser at Bancorp Treasury Services.

"That's why markets aren't reacting to other more significant data. They're really worried about what this could do," Cavanaugh said.

Former Bank of New Zealand chief economist Tony Alexander said the virus will mean a drop in Chinese tourists and "the effects on our tourist sector and especially Queenstown, Rotorua and their environs will be strong."

The impact will be wider than on Chinese visitor numbers. "The virus outbreak is likely to depress the tourism industry worldwide as people choose to stay home rather than risk exposure in crowded airplanes, buses and terminals. And it is worth adding in the slowly growing effect of the flight-shaming movement coming out of Europe."

Alexander said international tourism accounted for more than 20 per cent of export receipts in the year ended March 2019, or about $17 billion.

Data today showed New Zealand's annual trade deficit came in at $4.3b, down from the $4.7b expected.

Of note is the fact that exports to China continued to grow. Exports to China jumped 21 per cent to $16.7b in the 12 months to December and now make up 28 per cent of the total value of exports, versus 24 per cent in 2018.

The Australian data showed the index of Australian export prices fell 5.2 per cent in the December quarter with the main contributors being iron ore and coal. Australian import prices rose 0.7 per cent in the quarter.

The New Zealand dollar was at 96.61 Australian cents from 96.38 cents yesterday. It was at 49.99 British pence from 50.17, at 59.05 euro cents from 59.30, at 70.79 yen from 71.32 and at 4.5107 Chinese yuan from 4.5175.

The two-year swap rate fell to a bid price of 1.1228 per cent from 1.1693 yesterday, while 10-year swaps eased to 1.4250 per cent from 1.5175.