New Zealand's Dollar Slides After Finance Company Files for Receivership
The New Zealand dollar weakened against all of its major counterparts after a finance company filed for receivership, damping demand for the nation’s assets.
The so-called kiwi extended a monthly loss against the dollar after the New Zealand government said it would repay all depositors of South Canterbury Finance Ltd., a Timaru-based financial institution with around NZ$1.6 billion ($1.12 billion) of assets. Australia’s currency advanced to a four-month high against New Zealand’s after reports showed the bigger nation’s retail sales and home building approvals climbed last month.
“Offshore markets see the headline -- a large finance company failed -- and they are selling the kiwi on it,” said Imre Speizer, a market strategist in Wellington at Westpac Banking Corp., Australia’s second-largest lender. “The momentum for New Zealand economic data has been downward for a few months.”
The New Zealand dollar fell to 70.15 U.S. cents at 11 a.m. in New York from 70.71 cents yesterday, having dropped 3.4 percent this month. The currency slid 1.4 percent to 58.98 yen, set for a 6.1 percent drop in August.
The Australian dollar rose 0.9 percent to NZ$1.2721, after climbing to NZ$1.2748, the strongest since April 30. The so- called Aussie fell 0.3 percent to 88.91 U.S. cents from 89.18 cents, and fell 0.6 percent to 74.99 yen.
South Canterbury Finance, which has been in business since 1926 and has 13,000 customers, failed to attract a buyer or raise sufficient capital before an Aug. 31 deadline, Chief Executive Officer Sandy Maier said today on a call with reporters. Equity holders will be wiped out, he said.
‘Footing the Bill’
“The New Zealand dollar sagged on the SCF receivership story as taxpayers are footing the bill for the deposits under the retail guarantee scheme,” Annette Beacher, senior strategist at Toronto Dominion Bank in Singapore, wrote in research note today.
New Zealand’s dollar also fell for a second day versus the greenback and the yen after a report showed the nation’s home- building approvals rose at a slower pace in July. Home-building permits climbed 3.1 percent in July after gaining a revised 3.3 percent in June, Statistics New Zealand said in Wellington.
Australia’s dollar strengthened versus the kiwi as reports showed retail sales climbed 0.7 percent and building approvals advanced 2.3 percent in July.