NZ dollar gains amid hopes fiscal cliff will be scaled, Greece will get bail-out cash
By Paul McBeth
Nov. 20 (BusinessDesk) - The New Zealand dollar gained as equity markets rallied amid hopes US policymakers will reach agreement over the US$607 billion fiscal cliff and Greece will secure the next tranche of its rescue package.
The kiwi rose to 81.84 US cents at 8am in Wellington from 81.34 cents yesterday. The trade-weighted index advanced to 73.41 from 73.09 yesterday.
Stocks on Wall Street and in Europe gained amid growing optimism US President Barack Obama will reach a deal with the House of Representatives to avert automatic spending cuts and tax hikes that would push the world's biggest economy back into recession. The Standard & Poor's 500 index rose 1.6 percent and Germany's DAX 30 index rallied 2.5 percent.
Investors are also hopeful European policymakers will sign off on the next aid payment for Greece, with the yield on the Mediterranean nation's 10-year bond falling 8.9 basis points to 17.2 percent.
"Investors certainly seem hopeful we'll get done with the fiscal cliff and Greece will get its next cart of bail-out cash, and that hope is keeping equity markets perky," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "That's keeping the kiwi riding high."
The Reserve Bank of Australia will today release the minutes from this month's policy meeting, where the board unexpectedly kept the target cash rate at 3.25 percent. Governor Glenn Stevens is also scheduled to deliver a speech on the general state of domestic economy. The kiwi advanced to 78.63 Australian cents from 78.38 cents yesterday.
The Bank of Japan will review monetary policy today and is expected to keep interest rates near zero and maintain its asset-purchase programme as general elections loom next month which may install a new government. The kiwi climbed to 66.41 yen from 66.08 yen yesterday.
New Zealand's currency increased to 63.91 euro cents from 63.72 cents yesterday, and gained to 51.45 British pence from 51.09 pence.