NZ dollar heads for 1.7 percent weekly gain vs. yen as polls point to new Japanese govt
By Paul McBeth
Nov. 23 (BusinessDesk) - The New Zealand dollar is heading towards a 1.7 percent weekly gain against the yen after polling showed Japanese voters are backing a change of government that may take a more activist role in weakening the currency, while figures point to a weakening economy.
The kiwi traded at 67.10 yen at 5pm in Wellington from 67.21 yen yesterday, having touched a seven-month high yesterday. The yen is poised to weaken by 1.2 percent this week, recently trading at 82.19 yen per US dollar.
Former Japanese Prime Minister Shinzo Abe's Liberal Democratic Party will win next month's election, according to a Nov. 15 Jiji Press opinion poll, which showed support for current leader Yoshihiko Noda plunged after he doubled sales tax in a bid to revive the flagging economy.
Abe has backed more monetary easing and has said he may review legislation ensuring the independence of the Bank of Japan. The election battle comes as official figures showed Japan's trade deficit was wider than anticipated.
"It's possible we'll get a new government and Bank of Japan leader, but whether they do anything different, we'll have to wait and see," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "The yen came an awful long way" this week and may continue to depreciate, he said.
Trading in Japan is closed for a public holiday, and investors will be looking at inflation and industrial production figures from the world's third-biggest economy next week.
The kiwi is heading for a 0.5 percent weekly gain against the greenback, trading at 81.63 US cents at 5pm in Wellington from 81.55 cents yesterday. Trading in the US is expected to be thin after yesterday's Thanksgiving Holiday.
Strategists surveyed by BusinessDesk on Monday predicted the kiwi would stay in range of 80.50 US cents and 82.50 cents this week as US legislators tried to hammer out a deal to avert US$607 billion of automatic Federal spending cuts and tax increases.
New Zealand's currency fell to 63.32 euro cents from 63.50 cents yesterday after European finance chiefs failed to reach agreement on how Greece can secure the next round of its bail-out cash this week. The finance ministers will meet again on Monday.
The trade-weighted index was little changed at 73.27 from 73.30, and is heading for a 0.2 percent increase on the week. The kiwi edged up to 51.16 British pence from 51.09 pence, and was little changed at 78.51 Australian cents from 78.48 cents yesterday.