Bloomberg News

Aussie, N.Z. Dollars Drop to 3-Week Low on Greek Default Concern

September 11, 2011

Sept. 12 (Bloomberg) -- The Australian dollar dropped to the lowest in almost three weeks against its U.S. counterpart as concern Greece may default prompted investors to sell higher- yielding assets.

The New Zealand dollar declined to a three-week low before German Chancellor Angela Merkel holds talks on the debt crisis with European Commission President Jose Manuel Barroso today in Berlin. The so-called Aussie and kiwi fell for a third day on the prospect Asian stocks will extend a global slump in equities. Demand for Australia’s currency was also curbed before a report that may show the nation’s trade surplus narrowed to the least in three months in July.

“Unless there’s some major statements from the European authorities about resolving the debt situation, I think the euro, Aussie and kiwi will all fall this week,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s biggest lender.

Australia’s dollar touched $1.0408, the lowest since Aug. 23, before trading at $1.0436 at 9:05 a.m. in Sydney from $1.0470 in New York on Sept. 9. It dropped 0.5 percent to 80.87 yen. The kiwi weakened to 81.96 U.S. cents from 82.21, after earlier falling to 81.84, the least since Aug. 22. The currency depreciated 0.5 percent to 63.51 yen.

The Australian and New Zealand dollars may drop as much as 4 percent this week should the European situation deteriorate, Capurso said.

The MSCI World Index sank 3 percent on Sept. 9 while the Standard & Poor’s 500 Index of U.S. stocks lost 2.7 percent.

Greek Default Risk

Officials in Germany’s government are debating how to shore up the country’s banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment, three coalition officials said Sept. 9. The move capped a week of escalating German threats that Greece won’t get the money unless it meets fiscal targets and investors raising bets on a default.

Australia’s exports exceeded imports by A$1.9 billion ($1.98 billion) in July, compared with a A$2.05 billion surplus in June, according to the median estimate of economists surveyed by Bloomberg News ahead of today’s data release. That is the least since April.

--Editors: Benjamin Purvis, Naoto Hosoda

To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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