advertisement


Business news
You are here: ninemsn > Money > Business news

NZ dollar rises as Spain eyes ECB finance

12:00 AEST Mon May 28 2012
AAP
'Risk appetite is certainly starting the week on a better footing,' supporting the kiwi dollar, says BNZ currency strategist Mike Jones
'Risk appetite is certainly starting the week on a better footing,' supporting the kiwi dollar, says BNZ currency strategist Mike Jones (Thinkstock)

The New Zealand dollar has gained on speculation Spain may tap European Central Bank funding to bail out the recently nationalised lender, Bankia SA.

The New Zealand dollar rose to 75.72 US cents at 8am, up from 75.29 cents at the close of trading in New York on Friday and 75.30 cents on Friday at 5pm.

The trade weighted index increased to 69.12 from 68.89 last week.

Bankia, Spain's fourth-biggest bank, will seek 19 billion euros of state funding, more than the 15 billion euro government estimate to shore up the entire sector, after it increased its provisioning for bad debts.

"There is some chatter that a plan is being drawn up to rescue the weak banks - its looks reasonably optimistic," said Mike Jones, currency strategist at Bank of New Zealand.

"Risk appetite is certainly starting the week on a better footing," which is supporting the kiwi dollar, he said.

"The kiwi can climb a little higher in the short term - if we squeeze up to 76.40 cents we will see some sellers," Mr Jones said.

As indebted nation Greece prepares to hold fresh elections on June 17, all five Greek political polls released on Saturday favoured the pro-bailout New Democracy Party ahead of the far left anti-bailout party.

"This should support the euro and risk assets for now," Mr Jones said.

The New Zealand dollar rose to 60.40 euro cents from 60.14 cents at the close of trading in New York, to 77.35 Australian cents from 77.15 cents and to 60.52 yen from 59.97 yen.