The kiwi (as the currency is often nicknamed by the market participants) lost also to the euro, the Japanese yen and the Australian dollar, staying almost unchanged against the the Great Britain pound. Standard & Poor’s and Fitch Ratings both downgraded the country’s credit rating by one notch: from AA+ to AA for foreign currency and from AAA to AA+ for the local currency. The main reason cited by S&P is the series of the devastating earthquakes (with February 2011 Christchurch earthquake being the most significant of them):
The lowering of the foreign and local currency long-term ratings follows our assessment of the likelihood that New Zealand’s external position will deteriorate further at a time when the country’s fiscal settings have been weakened by earthquake-related spending pressures and fiscal stimulus to support growth.
The analysts point out a relative weakness of the downgrade’s effect on the background of other bearish factors for the New Zealand currency, like the global financial climate and commodity market correction. Nevertheless, this credit rating decision may set a long-term trend for the NZD.
NZD/USD fell from 0.7698 to 0.7640 as of 12:08 GMT today, reaching the daily low at 0.7617 — the minimum level since April 1. NZD/JPY declined from 59.15 to 58.75, while AUD/NZD grew from 1.2683 to 1.2719 with a daily high at 1.2773 (pair’s maximum since September 8)