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

 


NZ dollar declines after Bernanke says Fed may taper QE

NZ dollar declines after Bernanke says Fed may taper QE on signs of sustained improvement

By Tina Morrison

May 23 (BusinessDesk) - The New Zealand dollar fell after US Federal Reserve Chairman Ben Bernanke said the central bank may taper monthly bond purchases at its next few meetings if it’s confident of sustained gains in the economy.

The kiwi dropped to 80.64 US cents from 81.47 cents at 5pm in Wellington yesterday. The trade-weighted index fell to 76.38 from 76.82 yesterday.

The Dollar Index, a measure of the greenback against a basket of currencies, reached its highest in almost three years as investors anticipate the Fed will start unwinding its US$85 billion a month asset purchase programme. Traders are more upbeat about the prospects of the Fed tapering off QE this year as the world's biggest economy shows signs of improvement.

"The US dollar is strengthening and that is weighing heavily on the kiwi dollar," said Michael Johnston, a senior trader at HiFX. "If they scale back bond purchases it is a sign they are more confident about the economic recovery."

Bernanke told Congress the central bank could slow its money printing programme in the next few meetings and is continuing to assess prospects for the job market.

“If we see continued improvement, and we have confidence that that is going to be sustained, in the next few meetings we could take a step down in our pace of purchases,” he said.

Still, the U.S. economy remains hampered by high unemployment and government spending cuts, and tightening policy too soon would endanger the recovery, Bernanke said.

Steadily improving data from the US will likely continue to weigh on the kiwi although it may bounce higher should some reports fail to meet expectations, said HiFX's Johnston.

The kiwi has got further to fall," Johnston said. "We should see sub-80 before the end of the year."

Minutes released by the Fed of its last policy meeting showed many officials said more labour-market progress was needed before they slow asset purchases.

Traders will also be keeping tabs on the release today of the HSBC flash purchasing managers’ index, an early indicator of China’s manufacturing, to get a steer on how the world’s second biggest economy is faring.

The local currency was little changed at 83.22 Australian cents, from 83.29 yesterday. It dropped to 82.92 yen from 83.56 yen yesterday and fell to 62.74 euro cents from 63.06 cents. The kiwi weakened to 53.61 British pence from 53.78 pence yesterday.

(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