Although the New Zealand Dollar was able to advance on a broadly softening Euro, the inconclusive outcome of the Italian election saw the South Pacific currency fall against the majority of its other most traded peers.
The New Zealand Dollar exchange rate was trading in the region of 0.8321 against the US Dollar as of 09:40 am
Despite the population casting their votes the Italian election remains an inconclusive four horse race, and as the head of European macro credit research for the RBS Group states, it ‘is effectively a race between austerity and reforms on the one hand and the rise of the populist movements on the other. Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism.’
There are two candidates fighting to reverse the austerity measures implemented by the current Prime Minister, controversial ex-premier Silvio Berlusconi and former professional funny-man Beppe Grillo, and all this uncertainty has triggered significant volatility in the forex market.
The ‘Kiwi’ shed 0.6 per cent against the US Dollar yesterday and traded moderately lower against its Australian counterpart as the possibility of a hung Italian parliament cast a shadow over riskier assets like the New Zealand Dollar.
The South Pacific Dollar was trading lower against the Japanese Yen prior to the appointment of a new governor for the Japanese central bank, and dropped from 55.26 British pence to 54.59 despite the Pound broadly softening in response to the UK’s AAA credit rating downgrade.
Slight losses were also sustained against the Australian Dollar as rising gold prices allowed the ‘Aussie’ to climb.
But with the Italian election making investors nervous the ‘Kiwi’ advanced from 63.41 Euro cents to 63.82.
Any developments in this situation could cause additional movement in the New Zealand Dollar.
Although it seems that the centre-left coalition is slightly ahead in the lower house, a divided upper house could cause problems.
As one market strategist with Westpac Banking comments: ‘A picture of a new election being ordered, or an unstable coalition would be bad for the Kiwi.’
This evening’s trade balance figures for New Zealand will also be of interest.
Current Exchange Rates for New Zealand Dollar
The New Zealand Dollar to Euro (NZD/EUR) exchange rate is trading at 0.6362
The New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate is trading at 0.5491
The New Zealand Dollar to US Dollar (NZD/USD) exchange rate is trading at 0.8321
The New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate is trading at 0.8111
The New Zealand Dollar to Canadian Dollar (NZD/CAD) exchange rate is trading at 0.8536
The New Zealand Dollar to Japanese Yen (NZD/JPY) exchange rate is trading at 76.5090
These exchange rates were correct as of 9:40 am
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