BLBG:Australian Dollar Weakens Versus Yen on Concern Greece’s Crisis Unresolved
Australia’s dollar slid from a seven-month high versus the yen amid concern Greece will face continued difficulties in resolving its debt crisis, damping demand for higher-yielding assets.
The so-called Aussie held a decline versus the U.S. dollar before German lawmakers vote on a second bailout package for Greece. Europe’s most-indebted nation formally asked investors to exchange their holdings of government debt for new securities last week. The appeal of New Zealand’s dollar, nicknamed the kiwi, was limited after the nation unexpectedly posted a trade deficit last month.
“The Greek situation is far from concluded yet,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency-risk management company. “The Aussie has been perhaps showing signs of topping out.”
Australia’s dollar lost 0.1 percent to 86.72 yen at 5:04 p.m. in Sydney from 86.83 last week in New York. It earlier rose as much as 0.8 percent to 87.48 yen, the highest level since July 8. The Aussie weakened 0.1 percent to $1.0688 after losing 0.2 percent on Feb. 24. New Zealand’s currency dropped 0.1 percent to 67.77 yen after earlier reaching 68.35 yen, the strongest level since Aug. 1. The kiwi fetched 83.52 U.S. cents, 0.1 percent lower than the close last week in New York.
Australia’s 10-year (GACGB10) bond yield dropped six basis points, or 0.06 percentage point, to 4.03 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was one basis point lower at 3.08 percent.
Greek Crisis
Germany’s lower house will vote on 130 billion euros ($175 billion) in aid for Greece in Berlin today.
The bonds subject to a debt-swap invitation from Greece’s government had a total face value of about 206 billion euros, according to a Feb. 24 statement from the Ministry of Finance. The government is seeking a 90 percent participation rate and set a 75 percent rate as a threshold for proceeding with the transaction, the ministry said.
The Aussie maintained its decline after Prime Minister Julia Gillard defeated predecessor Kevin Rudd in a party leadership contest. Gillard won 71 votes to Rudd’s 31 in a ballot of Labor party lawmakers. Gillard’s government aims to implement unprecedented taxes on mining profits and carbon emissions and return the budget to surplus by 2012-13.
“The Gillard government may now press forward on some legislation that may not be seen as pro-business,” Rochford’s Mumford said. “It may be just a knee-jerk reaction. I expect this to have a very short-term effect on the market.”
ECB Refinancing
Losses in the Australian dollar were tempered before the European Central Bank offers a second round of unlimited three- year funds on Feb. 29. Euro-area banks will seek 470 billion euros, approaching the 489 billion euro take-up by 500 banks at the first long-term refinancing operation on Dec. 21, according to the median estimate of 28 analysts surveyed by Bloomberg News.
The ECB’s operation “should prove to be supportive for not only European markets, but bring a positive sentiment boost to the rest of the world,” Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotiabank, wrote in a report. Scotiabank is a unit of Bank of Nova Scotia.
Australia’s dollar has appreciated 1.4 percent this year, according to Bloomberg Correlation-Weighted Indexes. Its New Zealand counterpart has gained 4.3 percent, the best performance among the 10 developed-nation currencies tracked by the gauge.
The kiwi weakened after a report today showed New Zealand’s imports exceeded exports by NZ$199 million ($166 million) in January, from a revised NZ$306 million surplus in December. The median estimate in a Bloomberg News survey was for a NZ$167 million surplus last month.
“The trade figures were undoubtedly worse than market expectations,” said Mike Jones, a foreign-exchange strategist at Bank of New Zealand in Wellington. “The surprise in the trade numbers looks to have come from some temporary one-offs on the imports side. We might see the period of kiwi selling reverse over the rest of the day.”
To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
