Kiwi Leads Currency Gains as Risk Appetite Rises on Putin SpeechAndrea Wong
New Zealand’s dollar led gains among major currencies as investor risk appetite rose and stocks rallied after President Vladimir Putin said Russia isn’t seeking to split Ukraine further after annexing its Crimea region.
The Australian dollar and South African rand climbed. Canada’s dollar fell versus all of its 31 major counterparts after central-bank Governor Stephen Poloz said the risk of “secular stagnation” in the economy threatens growth. China’s yuan had the biggest three-day loss since at least 2007 amid concern financial risk is rising.
“The markets appear to be heavily discounting the likelihood of severe economic sanctions against Russia,” Michael Woolfolk, a global-markets strategist at Bank of New York Mellon in New York, said in a phone interview. “The relief rally seems to be premature.”
The kiwi, as New Zealand’s dollar is known, advanced 0.7 percent to 86.23 U.S. cents at 5 p.m. in New York and touched 86.40 cents, the highest level since April 12. It rose versus all of its 31 major peers. Australia’s dollar, nicknamed the Aussie, rallied 0.4 percent to 91.27 U.S. cents and reached 91.36 cents, the highest since Dec. 11, while South Africa’s rand gained 0.4 percent to 10.7324 per dollar.
The greenback depreciated 0.3 percent to 101.44 yen and slipped 0.1 percent to $1.3934 per euro. Japan’s currency gained 0.2 percent to 141.35 to the shared European currency.
The Canadian dollar dropped after Poloz said in a speech the nation’s long-term economic outlook will be constrained by an aging population that’s driving up savings and stemming demand. Speaking in Halifax, Nova Scotia, to reporters after his remarks, Poloz said he “cannot” rule out lowering the nation’s benchmark 1 percent interest rate.
The loonie, as the currency is nicknamed for the image of the aquatic bird on the C$1 coin, depreciated 0.8 percent to C$1.1135 to the greenback. It advanced 0.2 percent earlier to a one-week high of C$1.1026.
The euro declined as much as 0.3 percent versus the dollar as Germany’s ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, designed to predict economic developments six months in advance, dropped to 46.6 in March. It was the lowest since August.
China’s yuan declined for a third day on concern rising financial risks will weaken growth in the world’s second-largest economy.
Zhejiang Xingrun Real Estate Co., a closely held company with 3.5 billion yuan ($565 million) of debt, has collapsed and its largest shareholder has been detained, government officials familiar with the matter said yesterday. Yuan positions at Chinese financial institutions accumulated from foreign-exchange sales rose by 128.2 billion yuan in February, the smallest monthly increase since September.
“The mood is likely to weaken on negative headlines out of China,” Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong, wrote in a note today. Zhejiang Xingrun’s trouble “will boost fears about financial risks in China. Growth slowdown concerns will continue to be a dominant theme in coming weeks,” he said.
The yuan fell 0.2 percent to 6.1920 per dollar. The currency has declined 0.91 percent since March 13, the biggest three-day drop in data going back to April 2007.
The Standard & Poor’s 500 Index and the MSCI World Index each rose 0.7 percent.
The Bloomberg Dollar Spot Index fluctuated after reports showed U.S. housing starts and consumer prices were little changed last month. Housing starts slipped 0.2 percent to 907,000 homes at an annualized rate following a revised 909,000 pace in January, Commerce Department data showed. The consumer-price index rose 0.1 percent, matching the advance in January, Labor Department figures showed.
The index, which tracks the U.S. currency against 10 major counterparts, was little changed at 1,012.28 after rising 0.1 percent earlier.
The greenback has lost 1.2 percent this year, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The kiwi is the best performer with a 4.3 percent advance, while the yen has climbed 3.1 percent.
Federal Reserve policy makers started a two-day meeting. The U.S. central bank will probably scrap its 6.5 percent jobless-rate threshold in favor of qualitative guidance for signaling when it will consider raising the benchmark interest rate, economists said in a Bloomberg survey. Unemployment has fallen to 6.7 percent, from 7 percent in November.
Putin told Russian lawmakers not to believe “those who scare you with Russia, who yell that Crimea will be followed by other regions.” He said his nation doesn’t need a division of Ukraine beyond the Crimea region.
Western leaders condemned Putin’s push to annex Crimea and promised further sanctions as early as this week. The U.S. and European Union imposed asset freezes and travel bans yesterday on members of Putin’s inner circle and Crimean leaders.
Ukraine’s defense ministry authorized the use of live ammunition in self-defense after a soldier was killed and another shot as masked gunmen stormed a military installation in Crimea, spokesman Oleksandr Motuzyanyk said by phone.
Crimea voted on March 16 to join Russia, which should sign a treaty accepting the peninsula’s accession, according to an order signed by Putin and published on a government website today. The U.S. and European Union imposed sanctions on Russian officials and threatened to take further measures.