NEW YORK: The New Zealand dollar slipped below US75c versus the US dollar for the first time since November 2011 after the European Central Bank declared it will inject more than 1 trillion euro into eurozone economy in a bid to stave off deflation and jump-start economic growth.
The kiwi dipped to US74.81c against the US dollar — which strengthened on the back of the ECB announcement — just after 10am, down from US75.25c at 5pm yesterday. It’s still trading above the low of US73.87 it hit on November 25, 2011. Meanwhile, the New Zealand dollar rose to 65.98 euro cents, from 64.83 cents yesterday, and 49.95 British pence from 49.68 pence yesterday, after the ECB detailed its quantitative easing plans. Sam Tuck, senior foreign exchange strategist at ANZ, said the local currency was at a “significant level” as investors mull the outlook. “We are definitely at a very interesting area,” he said. The long-awaited quantitative easing program was an emphatic statement of the central bank’s willingness to do all it can to rejuvenate the economy shared by the 19-nation euro currency alliance. And it showed the multinational ECB’s readiness to assert its independence against critics in Germany, the eurozone’s largest and most politically influential country. The ECB said it would combine purchases of government bonds with an existing smaller program of private bond purchases, to total 60 billion euros a month through September 2016. All told, the program will amount to 1.1 trillion euros. By pumping new money into the eurozone’s banking system, the ECB’s bond purchases are intended to make loans cheaper and easier to get so companies can invest, expand and hire.
