Kiwi Dollar up on increased risk-taking – Euro hit by doubts about Greek aid package
Kiwi Dollar up on increased risk-taking – Euro hit by doubts about Greek aid package
05-04-2010 09:29
The Kiwi Dollar gained this Monday versus the key currencies. The expectation that Greece receives this €110 billion rescue package boosted risk-taking among investors. They preferred higher-return trading options like the New Zealand Dollar. Europe’s Single Common Currency faced the opposite scenario and dropped due to the uncertainty with relation to the Greek aid package.Risk-taking
New Zealand Dollar priced assets appeal to investors because of the high interest rates in the South Pacific country. In Japan is the interest rate at 0.1% and in the US close to 0%, in comparison to 2.5% in New Zealand. However, the profits of such trades can easily be eliminated by moves at the forex markets. For that reason, risk seeking needs to be high enough before investors make use of the discrepancy in interest levels. Appetite for risk among investors has increased due to the expectations that Greece receives the rescue package soon.Europe’s Single Common Currency
The uncertain situation with regard to the Greece bailout plan has affected Europe’s Single Common Currency this Monday. It is expected that the International Monetary Fund and the European Union governments provide the aid package.Greek bailout plan
The Greek bailout plan is one of the main discussion topics at the meeting of the EU leaders on May 7th. The EU leaders may demand extensive reductions in expenditure. The Greeks believe that such requirements are too rigorous. Rumors about possible budget cuts have already resulted in severe protests in Greece.
