BLBG:Australian, New Zealand Dollars Tumble to One-Week Low on Europe Concern
The Australian and New Zealand dollars dropped to the lowest level in a week as concern increased that Europe’s debt crisis may deepen, damping demand for higher-yielding assets.
The South Pacific currencies declined as Asian stocks fell following a report yesterday that showed the European Central Bank’s balance sheet soared to a record after it lent financial institutions more money last week to keep credit flowing.
“The European problem is going to continue to cause spooks in the market and some spikes in risk aversion,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company. “The moves are exaggerated by the lack of liquidity.”
The Australian dollar touched $1.0044, the lowest since Dec. 20, before trading at $1.0076 at 12:42 p.m. in Sydney, 0.2 percent below yesterday’s close in New York. The Aussie fell 0.3 percent to 78.44 yen after earlier dropping as low as 78.19, the weakest since Dec. 20.
New Zealand’s dollar earlier fell to 76.54 U.S. cents, the least since Dec. 21, before trading at 76.81. The kiwi weakened 0.2 percent to 59.80 yen. It earlier slid to 59.58 yen, the lowest since Dec. 20.
The MSCI Asia Pacific Index (MXAP) of stocks declined 0.7 percent following a 1.3 percent slide in the MSCI World Index (MXWO) yesterday.
The Australian and New Zealand currencies dropped yesterday after the Frankfurt-based ECB announced that its balance sheet expanded to a record 2.73 trillion euros ($3.52 trillion). Lending to euro-area banks jumped 214 billion euros to 879 billion euros in the week ended Dec. 23, it said.
The South Pacific currencies maintained declines even after Italy yesterday sold debt at lower borrowing costs than previous auctions of similar-maturity issues.
To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Naoto Hosoda at nhosoda@bloomberg.net
