Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ dollar heads for 5.8% gain in year on higher rates

NZ dollar heads for 5.8% gain in year on higher rates; fiscal cliff unresolved

By Paul McBeth

Dec. 31 (BusinessDesk) - The New Zealand dollar rose as traders squared up their year-end positions as negotiations in the US to stave off legislated tax hikes and spending cuts that automatically kick in on Jan. 1 remain unresolved. That kiwi is heading for a 5.8 percent annual gain on its relative yield advantage.

The kiwi rose to 82.33 US cents at 1.30pm in Wellington from 81.94 cents at 8.30am and 81.93 cents on Friday in New York. The trade-weighted index advanced to 73.82 from 73.55 last week, and is heading for a 6.8 percent annual gain.

US legislators were still locked in negotiations as both the Senate and House of Representatives were sitting in a last-ditch bid to avert the US$600 billion fiscal cliff, which would push the world's biggest economy back into recession.

"The kiwi's going to remain under pressure until they get a resolution" on the fiscal cliff, said Michael Johnston, director of foreign exchange at HiFX in Auckland.

New Zealand's currency has been a favourite among traders this year as investors have scoured the global for better returns in the relative safety of developed economies. Though local data has tended to disappoint, New Zealand's economy has continued to recovery in contrast to some of its peers.

At the same time global central banks have flooded the markets with money, meaning local interest rates have been more attractive. The yield on New Zealand's 10-year government bonds was 3.55 percent at 1.30pm in Wellington, compared to a 1.7 percent yield on US 10-year Treasuries, and 1.32 percent on 10-year German bunds.

"The US dollar will stay under pressure as they continue to print money - more supply of US dollars keeps it under pressure and will be the dominant factor certainly for the first half of next year," Johnston said.

Trading in the currency has become less volatile, climbing as high as 84.70 US cents in February and as low as 74.13 cents in June, and Johnston expects it to trade in 10 cents range next year between the high-70s and mid-to-high-80s.

Johnston expects the currency will spend more time above 80 Australian cents next year as Australia's economy slows down with its waning resources boom. The kiwi increased to 79.13 Australian cents from 79.01 cents last week, and is headed for a 4.8 percent annual gain.

The kiwi is headed for an 18 percent surge against the yen this year after a new Japanese government saw investors sell out of the yen on the expectation the administration will lean more heavily on the Bank of Japan to take a more active role in weakening the currency. The kiwi rose to 70.75 yen at 1.30pm in Wellington 70.53 yen on Friday in New York.

New Zealand's currency rose to 62.21 euro cents from 61.98 cents on Friday in New York and is headed for a 3.4 percent gain this year. It advanced to 50.93 British pence from 50.68 pence last week, and is poised to rise 1.6 percent this year.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news