Tradervox (Dublin) – The south pacific dollars have continued to lose against most currencies as concerns over Europe took a new twist with Greece now taking a back seat and Spain getting into the limelight as it struggles to rescue its banks. The turmoil in Europe has led to the decline in demand for currencies associated with growth which has caused the Aussie to drop to six-month low.
The Australian dollar also declined as reports showed that Home Approval declined against the market expectation. Some analysts speculate that the Reserve Bank of Australia may cut its interest rate further. The New Zealand dollar is set for its worst monthly decline against the US dollar since September. The recent declines by the south pacific dollars are limited by technical indicators that show the recent drop is excessive.
With focus now turning to Spain, analysts have indicated that it is becoming a huge problem with its bonds surging to almost levels that sent Portugal, Ireland and Greece to seek international bailout. The country is also faced with a banking problem that may prove difficult to tackle. Rochford Capital director, Derek Mumford indicated that Spain will require a lot of money to bail them out despite ECB showing some reluctance to come to its aid. The trouble in Europe will tie down the south pacific currencies as fear takes charge of the market.
There is a tussle between the ECB and the Spanish government as report from Spain indicates that ECB has refused to accept a plane to recapitalize one of its largest lenders. The ECB later denied having been contacted by the Spanish government to discuss such terms. As this turmoil continues, the Australian dollar was trading at 97.21 US cents after it had declined to as low as 96.74 US cents, the weakest it has been since November 25. The New Zealand currency was trading at 75.48 US cents.
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