The New Zealand Dollar has strengthened against most of its major trading partners, and is little-changed against the US Dollar as investors seek out safe places for their cash as the impact of the Cyprus bailout washes through Europe.
Concern is high among traders that the banking controls being imposed on the Cypriot banking system could cause on a run in other Eurozone nations like Portugal, Spain and Italy and could potentially lead to a further escalation of the Euro crisis.
Investors are looking for safe havens and “we’re a country that’s nowhere near the euro-zone,” said Tim Kelleher, Head of Institutional FX Sales NZ at ASB Institutional.
“There seems to be safe haven buying on the crosses, with the Kiwi/Euro, Kiwi/Sterling and TWI stronger.”
The currency has also seen some support from the continuingly increasing price of the country’s biggest export of dairy products. Fonterra Group, the nation’s biggest company and largest dairy goods exporter in the world revealed that it would increase its payouts to famers by 30 cents a kilogram of milk solids. The ongoing drought is now threatening to spread to the rest of the country sapping supply and forcing up global prices.
The currency came under some pressure early in the session after the ANZ business outlook released its latest business confidence data. Confidence slipped this month from the previous months high as the drought caused pessimism in the agricultural sector.
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