New Zealand Dollar: NZD Falls on Declaration of Pandemic and Europe Travel Ban

New Zealand Dollar: NZD Falls on Declaration of Pandemic and Europe Travel Ban

The New Zealand dollar fell yesterday as the World Health Organisation (WHO) declared coronavirus a pandemic and after the US President Donald Trump announced a ban on travellers from Europe for 30 days. The ban did not include travellers from the UK, however. The NZ dollar continued to falter at around the 0.49 level against the pound yesterday and into this morning as the global threat of the coronavirus only worsened with nations around the world implementing containment plans as a positive measure, but business is likely to take a heavy hit.

World nations hinder NZD with containment announcements

Trump’s travel ban which was announced overnight banning travel from Europe to the US (except from the UK) was not the first injection of containment efforts from global leaders. Italy has remained under nationwide lockdown for days since their announcement earlier in the week which saw the Italian borders closed with schools also seeing the same fate. A positive takeaway from the US ban however, is that the ban doesn’t include trade with Europe which provided markets with a little relief.

Meanwhile, the New Zealand dollar continues to be somewhat resilient given the current risk-off market. Although not performing by any stretch, the NZ dollar has been volatile but overall has remained around the 0.49 level against GBP for a number of days despite worsening in the coronavirus crisis as countries go into lockdown.

ECB decision up next for upcoming shift in market, EUR could drop against NZD

Later today will see the release of the European Central Bank’s (ECB) interest rate decision, which is likely to be the next major event which will shake things up in the market. The expectations for the European central bank have been mixed, with some expecting no chance in the ECB’s deposit rate, which is already at a level of minus 0.5%, while others expect a very small cut, maybe even to minus 0.6%. But the markets appear to be concerned with how the ECB may be able to aide their economy with their various lending programmes. For example, the ECB might target lending into particularly vulnerable parts of the economy like small businesses.

The market expects the ECB to call on governments to spend more, particularly in Germany, where maintaining a budget surplus has been paramount – with Germany recording a record 13.5 billion euro surplus in 2019. This may be the move that is made as the German PM Angela Merkel noted yesterday that Germany will do whatever possible to support the European economy.

If you have an upcoming currency transfer and would like to learn more on GBPNZD exchange rates, feel free to contact me directly using the form below.