N.Z. Dollar Falls After English Says `Possible' Economy Entered Recession
The New Zealand dollar fell against most of its major counterparts after Finance Minister Bill English told parliament it was “possible” the nation’s economy slipped into recession in the second half of last year.
The Australian dollar earlier traded close to this year’s high before a report tomorrow that is forecast to show Australia had its longest stretch of jobs growth since 2007. The currency dropped as stocks slumped.
“English’s comments continue a tried and tested tradition of kiwi leaders trying to talk the New Zealand dollar down,” said Adrian Foster, Hong Kong-based head of financial-market research for Asia at Rabobank Groep NV.
New Zealand’s dollar fell 0.4 percent to 77.17 U.S. cents at 12:13 p.m. in New York, from 77.51 yesterday. It weakened 0.4 percent to 63.56 yen.
Australia’s currency dropped 0.4 percent to $1.0102 from $1.0146 yesterday and $1.0228 on Jan. 3. It bought 83.23 yen from 83.57 yesterday, when it reached 83.73, the most since May 13.
The Standard & Poor’s 500 Index fell 0.5 percent.
New Zealand’s currency fell after English said that the nation’s recovery is going to have some challenges. The economy may have contracted in the fourth quarter of 2010, entering its second recession in two years, he said.
Gross domestic product in New Zealand shrank 0.2 percent in the three months through Sept. 30, and a report last week showing a decline in fourth-quarter employment added to evidence of a second-straight quarterly contraction.
Australian employers added 17,500 jobs in January, an 11th- straight month of gains, according to economists surveyed by Bloomberg News before the statistics bureau reports the data tomorrow. The unemployment rate was unchanged at 5 percent, the lowest since January 2009, the survey shows.
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