NZ dollar extends gains as Bollard says economy understated
By Paul McBeth
Feb. 17 (BusinessDesk) – The New Zealand dollar extended gains through the local trading session after Reserve Bank Governor Alan Bollard said the nation’s economic performance is probably understated by official data, amid upbeat investor sentiment on strong US data.
The kiwi rose to 83.67 US cents at 5pm from 83.24 cents just before 8.30am and 82.78 cents yesterday. The trade-weighted index advanced to 73.73 from 73.13.
Demand for the kiwi was stoked by Bollard’s speech to a business audience in Auckland, where he said “it is almost certain that consistent measurement conventions used in New Zealand and Australia would narrow the reported gap with Australia.” The different ways gross domestic product is measured in the trans-Tasman neighbours could be short-changing New Zealand by as much 10 percent.
“It was a little bit more an upbeat assessment from the governor,” said Dan Bell, currency strategist at HiFX in Auckland. “The kiwi has the potential to drift a little higher overnight, towards the five-month high.”
The currency was bolstered yesterday after investors’ appetite for higher-yielding, riskier assets was stoked by better than expected American employment, housing and manufacturing data. That upbeat sentiment carried through the local session, with stock markets gaining throughout the Asia Pacific. Australia’s Standard & Poor’s/ASX 200 index was up 0.4 percent in afternoon trading, while Japan’s Nikkei 225 gained 1.8 percent and Hong Kong’s Hang Seng climbed 0.7 percent.
That quelled fears from the day before about Greece’s ability to tap a bail-out fund after European finance ministers considered delaying the rescue package. The region’s policymakers are due to meet on Monday for more discussions about the Mediterranean nation.
HiFX’s Bell said traders are continuing to focus on good news, which has kept appetites for riskier assets high, but markets are still incredibly volatile.
“The market is becoming a little bit more comfortable with the idea of a Greek default,” Bell said.
The New Zealand dollar increased to 63.73 euro cents from 63.54 cents yesterday and gained to 52.95 pence from 52.79 pence. It rose to 66.12 yen from 63.54 yen yesterday, and advanced to 77.62 Australian cents from 77.45 cents.