Delayed Spanish bailout quells NZ dollar
Wed, 03 Oct 2012 10:18a.m.
The New Zealand dollar fell along with equity markets after Spanish Prime Minister Mariano Rajoy said he has no immediate plans to request a bailout, quelling speculation that a request was near.
The New Zealand dollar rose as high as 83.30 US cents overnight falling to 82.62 cents at 8am down from 82.80 cents on Tuesday at 5pm.
The trade weighted index decreased to 73.64 from 73.72.
Stocks fell on both sides of the Atlantic, with the Dow Jones Industrial index slipping 0.5 percent and France's CAC 40 down 0.6 percent.
Mr Rajoy is weighing up the terms of a September 6 proposal by the European Central Bank president to buy bonds of cash-strapped nations, including Spain, if they formally request aid.
"It's anyone's guess as to when Spain will formally apply to the European stability mechanism for assistance," said Mike Jones, market strategist at Bank of New Zealand.
"We do know that immense diplomatic pressure is being placed on the Spanish prime minister to do so."
The New Zealand dollar rose to 80.58 Australian cents from 79.85 cents after the Reserve Bank of Australia cut its key interest rate a quarter of percentage point to 3.25 percent, citing weaker commodity prices in a global market where the outlook for economic growth "has softened".
"We suspect there is more easing to come from the RBA, assuming inflation remains benign and the global outlook remains lacklustre," Mr Jones said.
The New Zealand dollar fell to 63.98 euro cents from 64.18 cents and declined to 64.50 yen from 64.64 yen.
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