Rating cuts send NZ dollar sliding
Source: Agencies |
October 1, 2011, Saturday
|
Print Edition
Print Edition
NEW Zealand suffered two rating downgrades within hours yesterday when Standard & Poor's and Fitch cut the country's ranking by one notch over concerns about its growing foreign debt.
Fitch moved first, marking New Zealand's first downgrade in 13 years and sparking a sharp slide in the New Zealand dollar.
Although bond yields are near record lows, the higher risk rating will add to funding costs and could delay when the Reserve Bank of New Zealand resumes raising rates, analysts said.
"It is likely to delay any official moves from the RBNZ, and the risks are certainly becoming even more skewed toward a later start than our March expectations," Goldman Sachs economist Philip Borkin said.
S&P and Fitch cut New Zealand's sovereign rating to double A from double A-plus, on par with Kuwait and Abu Dhabi. Both agencies classified the outlook for New Zealand as "stable."
New Zealand Finance Minister Bill English blamed the downgrades in part on sensitivity over the eurozone debt crisis, saying the government was making cuts to return to budget surplus by the 2014-15 fiscal year. Its current account deficit narrowed to 3.7 percent of GDP in June, from 8.9 percent at the end of 2008.
The New Zealand dollar fell 1.5 percent to a session low of US$0.7638, later recovering to settle around US$0.7660.
Fitch moved first, marking New Zealand's first downgrade in 13 years and sparking a sharp slide in the New Zealand dollar.
Although bond yields are near record lows, the higher risk rating will add to funding costs and could delay when the Reserve Bank of New Zealand resumes raising rates, analysts said.
"It is likely to delay any official moves from the RBNZ, and the risks are certainly becoming even more skewed toward a later start than our March expectations," Goldman Sachs economist Philip Borkin said.
S&P and Fitch cut New Zealand's sovereign rating to double A from double A-plus, on par with Kuwait and Abu Dhabi. Both agencies classified the outlook for New Zealand as "stable."
New Zealand Finance Minister Bill English blamed the downgrades in part on sensitivity over the eurozone debt crisis, saying the government was making cuts to return to budget surplus by the 2014-15 fiscal year. Its current account deficit narrowed to 3.7 percent of GDP in June, from 8.9 percent at the end of 2008.
The New Zealand dollar fell 1.5 percent to a session low of US$0.7638, later recovering to settle around US$0.7660.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
