NZ dollar climbs above 78 US cents

Article – BusinessDesk

June 27 (BusinessDesk) – The New Zealand dollar rose above 78 US cents as weak US economic data cast doubt on how quickly the Federal Reserve will stop its money-printing policy.

NZ dollar climbs above 78 US cents

By Paul McBeth

June 27 (BusinessDesk) – The New Zealand dollar rose above 78 US cents as weak US economic data cast doubt on how quickly the Federal Reserve will stop its money-printing policy.

The kiwi rose to 78.19 US cents at 5pm in Wellington from 77.93 cents at 8am and 77.35 cents yesterday. The trade-weighted index advanced to 73.75 from 72.98.

Commerce Department figures yesterday showed the US economy grew at a 1.8 percent annualised pace in the first quarter, slower than the prior reading of 2.4 percent. That gave investors more to think about after US Fed chairman Ben Bernanke signalled he will start unwinding the central bank’s US$85 billion monthly bond buying programme as long as the data continues to back an economic recovery.

“People are probably going to be looking for Fed rhetoric,” said Alex Hill, head of dealing at HiFX in Auckland. “It looks like the kiwi wants to go a little higher from here.”

Hill said the currency may trade between 77.20 US cents and 79.50 cents going into the end of the week.

New Zealand business confidence rose to a three-year high this month as a booming construction sector underpinned sentiment, while trade figures showed a smaller surplus in May than expected.

Reserve Bank deputy governor Grant Spencer told a business audience in Wellington that hiking interest rates wasn’t the right policy response to an overheated property market right now, and that the introduction of restrictions on home loan leveraging is preferred to quell the bubble.

Separately, RBNZ figures showed the central bank was a net buyer of New Zealand dollars in May, with a net $90 million in purchases. That was a turnaround from its net sale of $256 million in April when RBNZ governor Graeme Wheeler said the bank had intervened in foreign exchange markets to take the tops off rallies and remind currency traders not to make one-way bets on the kiwi.

The local currency rose to 83.90 Australian cents from 83.48 cents yesterday and increased to 76.43 yen from 75.57 yen. The local currency gained to 59.99 euro cents from 59.18 cents and advanced to 50.97 British pence from 50.15 pence.

(BusinessDesk)

Content Sourced from scoop.co.nz
Original url