NZ dollar gains as tough-talking Japanese govt lifts stocks
NZ dollar gains as tough-talking Japanese govt lifts Asian stocks, fiscal cliff looms
By Paul McBeth
Dec. 27 (BusinessDesk) - The New Zealand dollar rose in local trading as the prospect of a stronger Japanese government stoked investors' appetite for riskier assets, with stock markets gaining across Asia.
The kiwi rose to 81.98 US cents at 5pm in Wellington from 81.69 cents at 8am and 82.15 cents in Asian trading yesterday. The currency gained to 70.30 yen from 70.08 yen yesterday.
Japan's Nikkei 225 index climbed 1.3 percent in afternoon trading, leading stocks across the region higher, after new Prime Minister Shinzo Abe directed his finance minister Taro Aso to increase coordination with nation's central bank in nobbling the yen's strength to kick some life back into the country's exports. Japan's currency depreciated to 85.80 yen per US dollar, its weakest level since September 2010.
"If you're in Asia at the moment, you're fairly upbeat that we might start to see signs of improvement in the Japanese economy," said Robert Rennie, chief currency strategist at Westpac Banking in Sydney. "The sharp weakening in the yen has been a key driver."
That comes as US legislators try to muddle through their partisan politicking in trying to avert the fiscal cliff of US$600 billion of Federal tax increases and spending cuts, which would send the world's biggest economy back into recession.
Westpac's Rennie there's a growing feeling that US policymakers won't be able to cut a deal before the Jan. 1 deadline when the cliff comes into effect, and that markets will have to wait until January until a resolution is reached. That will keep a cap on the kiwi dollar at about 82 US cents, he said.
New Zealand's trade-weighted index fell to 73.52 from 73.68 yesterday, and the kiwi declined to 79.05 Australian cents from 79.29 cents. The currency fell to 50.72 British pence from 50.90 pence yesterday and dropped to 61.92 euro cents from 62.20 cents.