NZ dollar strengthens as global backdrop improves

NZ dollar strengthens as global backdrop improves, Greek concerns abate

March 15 (BusinessWire) – The New Zealand dollar strengthened against most major currencies as global data helped stoke optimism the global recovery is continuing apace, fueling investors’ appetite for risk.

Former European Commission President Romano Prodi said the worst of Greece’s fiscal troubles are over and other European nations are unlikely to suffer in the same way, soothing concerns other economies in the region face deteriorating fiscal positions. Industrial production in Europe jumped 1.7% in January, the biggest gain since 1989, while U.S. retail sales rose 0.3%. America’s Federal Market Open Market Committee meets this week amid speculation it will lift its assessment of the world’s largest economy.

“The global outlook has become more NZD supportive of late as forecasts for the global economic expansion continue to rise and concerns around Greece, and its potential implications for global markets, diminish,” said Mike Jones, currency strategist at Bank of New Zealand.

The lender’s index of risk appetite, on a scale of 0 to 100%, is currently at 70%, the highest since May 2008, Jones said in a note.

The New Zealand dollar traded at 70.40 U.S. cents from 70.16 cents in late trading in New York on Friday. The traded-weighted index of the kiwi dollar rose to 64.92 from 64.63. The kiwi was little changed at 76.67 Australian cents and climbed to 64.02 yen from 63.52 yen. The local currency rose to 51.17 euro cents from 50.95.

Jones said based on BNZ’s short-term valuation model, the kiwi is currently undervalued against the greenback, with a ‘fair-value’ range of 0.7100-0.7300.

Also this week, the Bank of Japan meets amid expectations it will increase asset purchases, while Euro-zone finance ministers are scheduled to meet.

(BusinessWire)