Virus eats into NZ dollar, will linger a while

The New Zealand dollar fell on a growing realisation coronavirus will have a far longer impact than a short, sharp economic shock.

The kiwi was trading at US62.54c at 5pm yesterday from US62.90c at the same time on Thursday. The trade-weighted index was at 70.03 points from 70.48.

The domestic currency has fallen from a high at US67.55c on December 31 and is now at its lowest levels since October.

Martin Rudings, an OMF adviser, said the market was waiting for the World Health Organisation to officially declare a pandemic. WHO director-general Tedros Ghebreyesus said yesterday the outbreak had reached a “decisive point” with “pandemic potential”.

More than 83,000 people have been infected, deaths are approaching 3000 and cases had been reported in 54 countries. Of particular note yesterday was the news that a woman in Japan had recovered from the virus but tested positive again.

“It looks like there’s a lot more downside in equities — nothing’s supporting earnings going forward and supply chains have been broken,” Rudings said. “There’s a realisation that this is likely to be long-lasting — optimism has gone out the door.”

This country also has its first case — a person who travelled to New Zealand this week from Iran, where at least 26 people have died from the virus and hundreds of people are infected.

The NZ dollar was at A95.64c from A95.09c at 5pm on Thursday. It was at 48.57 British pence from 48.67, at 56.91 euro cents from 57.67, at 68.27 yen from 69.34 and at 4.3840 Chinese yuan from 4.4143.

The two-year swap rate eased to a bid price of 0.8452 per cent from 0.9457 on Thursday while 10-year swaps fell to 1.1800 per cent from 1.2450.