NZ dollar extends gains vs. euro and greenback

By Hannah Lynch

Jan. 19 (BusinessDesk) – The New Zealand dollar crept higher against the euro and the greenback after the International Monetary Fund proposed to top up its lending capacity and positive US data continued, boosting demand for higher-yield currencies.

The New Zealand dollar traded at 62.82 euro cents at 8.30 a.m., up from 62.79 cents at 5pm yesterday. The kiwi traded at 80.72 US cents, up from 80.24 cents.

The stronger local unit came as the International Monetary Fund announced plans to increase its lending capacity by as much as US$500 billion in an attempt to safeguard the global economy against worsening effects of Europe’s debt crisis. The fund is expected to tap oil-exporting nations China, Brazil, Russia and India to contribute to the loan after euro-region nations pledged $385 billion last year. It plans to strike a deal at a meeting of G20 finance ministers and central banks in Mexico City this February, Bloomberg reported.

“Europe is not blowing up – these things are helping the kiwi,” said Daniel Bradanovic, head of institutional sales, global markets, at HSBC. “The kiwi has broken higher – it still has the potential for the euro to go higher.”

Output from US factories, mines and utilities rose 0.4 percent last month following a 0.3 percent decline in November, Federal Reserve data showed in Washington. Confidence amongst US homebuilders also increased to the highest level since June 2007. The National Association of Home Builders/Wells Fargo sentiment gauge increased to 25 this month. Readings lower than 50 mean more respondents consider conditions to be negative.

In New Zealand, the first significant set of data for 2012 is due out today, with the Consumer’s Price Index to be released at 10.45 a.m. The CPI comes a week before the Reserve Bank of New Zealand’s January official cash rate review, which is widely expected to signal no change at 2.5 percent.

The New Zealand dollar traded at 77.48 Australian cents, up from 77.12 cents, and at 61.99 yen from 61.55 yen yesterday. It was little changed on 52.31 British Pence from 52.29 pence.

The trade-weighted index rose to 71.87 from 71.56.

(BusinessDesk)

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