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Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Slumps: ECB Governing Council Member ‘Wary’ of New Stimulus Measures

The Euro has weakened today verses the New Zealand Dollar (EUR/NZD), partly thanks to doubts over the latest ECB stimulus measures. Meanwhile, the New Zealand Dollar (NZD) is weak, yet it has been able to advance verses the Euro (EUR).

Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Weakens as ECB Hansson Warns of Stimulus ‘Bubble’ Side Effect

With markets still reeling from the latest round of stimulus measures delivered by the European Central Bank (ECB) at last Thursday’s policy meeting, one ECB member has confessed that he is wary of the side effects. The Governing Council voted to cut the deposit rate by a further -0.1%, increase the rate of asset purchasing under quantitative easing by €20 billion per month and slash the benchmark interest rate to 0%.

Ardo Hansson, a member of the ECB’s Governing Council, has admitted that the effects of such loose monetary policy are of concern to him, explaining, ‘My main concern is about the side effects – for example, effects on the financial stability – if the asset price rises, we may, sooner or later, call this a bubble. Conservative market participants may also begin to take unsuitably large risks.’

Hansson, one of the few Governing Council members who argued against some of the new stimulus measures, said he was worried that they would allow governments to postpone making the serious financial reforms that many believe are needed in order to create sustainable growth.

‘People are people, politicians are politicians and if they are given the chance to breathe more easily, then sometimes they do it that way,’ he told Aripaev, the Estonian business daily.

The Euro to New Zealand Dollar (EUR/NZD) exchange rate is currently trading in the region of 1.6788.

New Zealand Dollar to Euro (NZD/EUR) Exchange Rate Advances despite Overall Weakness

The New Zealand Dollar was able to advance on the Euro today, even though it remained weak against the majority of currencies. The latest GlobalDairyTrade auction heralded another drop in dairy prices, with prices falling 2.9% to an average of US$2,190 per metric tonne. The drop was twice as large as the previous month’s increase, which itself was the first rise in 2016.

Meanwhile, the future of the important Trans-Pacific Partnership (TPP) agreement looks to be in jeopardy thanks to the progress of the race for the US presidency. Two prominent candidates, Donald Trump and Bernie Sanders, both hold views on globalization that could see them turning away from the new deal, which has been in negotiation for five years and includes New Zealand, Australia, the US, Canada and Japan among its twelve signing nations.

Regardless, the New Zealand Dollar has advanced on the Euro, with the NZD/EUR exchange rate trading between 0.5922 and 0.5972.

Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Forecast: NZ Growth and EZ Inflation Data on Tap

Gross Domestic Product figures for New Zealand, released during tomorrow’s Australasian session, are expected to show a -0.3% slowdown in economic growth during the final three months of 2015. Tomorrow’s European session contains the release of the Eurozone Consumer Price Index, which is predicted to show deflation compared to the previous year.

The Euro to New Zealand Dollar (EUR/NZD) exchange rate is currently trading between 1.6697 and 1.6874.