Bloomberg News

Aussie, N.Z. Dollars Fall as Turmoil in Greece Damps Risk Demand

May 15, 2012

Australia’s dollar reached the lowest level this year against its U.S. counterpart after talks to form a Greek government failed, fueling concern the nation may leave the shared currency and damping investor appetite for risk.

New Zealand’s dollar slid against most of its major counterparts as the Greek announcement spurred speculation Europe’s debt crisis will worsen. The Aussie traded below parity with the greenback for a second day. Global stocks fell.

“The mood in the market is pretty sour, and globally that’s also the case,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “You expect the commodity currencies to also underperform.”

The Australian dollar declined 0.2 percent to 99.37 U.S. cents yesterday in New York. It touched 99.22, the weakest since Dec. 20. The Aussie gained 0.2 percent to 79.67 yen.

New Zealand dollar, dubbed the kiwi, weakened 0.9 percent to 76.93 U.S. cents and touched 76.828, the lowest since Dec. 29. It fell 0.5 percent to 61.69 yen.

The MSCI World Index (MXWO) of stocks dropped 0.9 percent.

Greek President Karolos Papoulias’s meeting in Athens yesterday with political leaders failed to produce a government after an inconclusive May 6 vote. He called for a meeting today to form a caretaker government to lead the country until the vote.

A second election threatened to extend Greece’s political gridlock and reignited speculation the country will renege on its pledges to cut spending, required by the terms of its 240 billion euros ($306 billion) in bailouts.

To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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