Kiwi dollar falls, Moody’s considers China downgrade
(25 May 2017 – New Zealand) The New Zealand dollar fell along with the Australian dollar after officials at Moody's Investors Service officials said China could face another credit rating downgrade if it doesn't contain its debt mountain, while both currencies were hurt by falling commodity prices.
The kiwi declined to 70.14 US cents by the end of trade, up about 1.3 percent from the previous.
Moody's official Li Xiujun said that China may not be able to hold onto its A1 credit rating if the nation's debt grows at a faster pace than the rating agency anticipates. The webcast follows Moody's decision this week to cut China's rating to A1 from Aa3, earning a rebuke from the world's second-largest economy, with the finance ministry describing Moody's as "sloppy" and its move based on inappropriate methodology. The Australian dollar fell more than the kiwi on the news, on the basis that it is more exposed to changes in China's fortunes and demand for its iron ore and coking coal.
The kiwi rose to 94.39 Australian cents from 93.84 cents yesterday and fell to 4.8060 yuan from 4.8373 yuan.
The kiwi was little changed at 62.60 euro cents and rose to 54.40 British pence from 54.21 pence. The local currency fell to 78.23 yen from 78.56 yen.
New Zealand's two-year swap rate decreased 1 basis point to 2.21 percent and 10-year swaps fell 4 basis points to 3.19 percent.
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