New Zealand Dollar: GBP NZD Exchange Rate Spirals On Dairy Contamination Fears

Modified: Monday, 5 August 2013 09:26 BST - Written by John Cameron

STORY LINK New Zealand Dollar: GBP NZD Exchange Rate Spirals On Dairy Contamination Fears

Not for the first time in recent months, Friday afternoon’s US employment data triggered wild gyrations for some of the world’s leading tenders in the global currency markets. The major losers during the latter part of Friday’ trading session were the high-yielders and the commodity-driven units which gave up significant ground thanks to a heady combination of weaker than anticipated US job creation numbers and a drop in the overall level of American joblessness which makes a near-term trimming of the Federal Reserve’s Quantitative Easing programme highly likely.

One of the biggest losers on Friday was the New Zealand Dollar, with the move against the Kiwi causing the GBP NZD exchange rate to spiral from the high 1.8000s on Thursday to finish the week well into the 1.9000s once more. However, when the GBP NZD market re-opened for business at the start of last night’s Asian session, the pair had jumped by several cents. The huge price gap between Friday’s closing level and yesterday’s opening rate of 1.9776 was due to the weekend news that New Zealand’s largest company Frontera had found traces of bacteria which can cause botulism in its powdered milk products. Frontera is the world’s number one exporter of dairy products and comprises a major part of the Kiwi economy. Much of the firm’s produce is exported to China - a market which remains sensitive to any potential contamination of baby milk followed recent incidents – making the weekend revelations particularly damaging to the New Zealand Dollar. This week’s session could prove to be a torrid one for the Antipodean tender.

Elsewhere, Friday brought some positive news for the Pound with the release of another encouraging British housing survey. The latest Nationwide house price survey showed that UK property prices had jumped by an annualised 3.9% last month – this was the highest reading for the figure for almost three years. Sterling remains weighed-down by fears that the Bank of England will continue to trash talk Britain’s economic recovery. However, Friday’s Nationwide survey makes the Bank’s apparent remit considerably tougher to carry out.

The spot exchange rates relevant to this news item are as follows: Pound to New Zealand Dollar exchange rate is trading down 0.12% at 1.9812 GBP/NZD and the Pound to Australian Dollar exchange rate is trading up 0.19% at 1.72005 GBP/AUD. To compare exchange rates or get information on sending money abroad please refer to the main Currency News UK website.

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