Yesterday the New Zealand Dollar achieved a seven-month high against the Euro as the common currency broadly softened on fears that the actions taken to save Cyprus may be applied to similarly struggling nations within the Eurozone.
The New Zealand Dollar exchange rate was trading in the region of 0.8350 against the US Dollar as of 10:27 am
The ‘Kiwi’ then extended gains against the Euro and advanced on its American counterpart after New Zealand’s statistics office released a report revealing that the nation posted a surprising trade surplus last month.
Although economists expected the trade balance report to show a trade deficit of 12 million NZ Dollars, exports exceeded imports in February, resulting in a surplus of 414 million New Zealand Dollars.
While this news supported the New Zealand Dollar, the ‘Kiwi’ could drop if industry expert’s fears materialise. Some are concerned that the decision to save Cyprus from defaulting by imposing losses on depositors and bondholders could become a template applied to other Eurozone nations.
The worry that this may happen could encourage the citizens of floundering Eurozone nations to withdraw their deposits in an effort to protect them.
As market strategist Imre Speizer comments: ‘This week is pretty much risk on, risk off all around Europe. If we see any hint of a run on Portugal or Spain or even Greece, that would certainly take the Kiwi lower for sure.’
Speizer added that the Kiwi could drop to 83 US cents within the next few days.
The NBNZ business confidence survey, due for release at 00:00 GMT could trigger additional Kiwi movement in the hours ahead.
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