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

 


AMP Capital selling kiwi dollar in expectation of decline

AMP Capital selling kiwi dollar in expectation of decline

By Paul McBeth

April 17 (BusinessDesk) - AMP Capital New Zealand, which manages more than $18 billion of assets, anticipates the kiwi dollar will start falling, and has started reducing its holdings in the local currency.

The New Zealand dollar rose to a post-float high 81.03 on a trade-weighted basis on April 10, recently trading at 80.04, and ended the March quarter at a record on the MSCI weighted New Zealand dollar index, which AMP Capital uses to track the currency, head of investment strategy Keith Poore told a media briefing in Wellington.

With dairy prices falling on Fonterra Cooperative Group’s GlobalDairyTrade auction in recent months, and the prospect of US interest rates starting to rise next year, the currency’s appeal is expected to diminish, he said.

“The kiwi dollar is starting to look good as a good proposition to sell - if you can sell something at a record-high, that’s not a bad place to sell something,” Poore said. “What we’ve been doing in the portfolios is selling New Zealand dollars, just a small position at the moment, so going unhedged in the portfolios to benefit what we think will be an eventual reversion to a lower New Zealand dollar.”

New Zealand’s accelerating economy, which AMP Capital sees growing 3.7 percent this year, and the prospect of rising interest rates have attracted investors to the local currency in search of yield, though that allure will dim as the rest of the world recovers from a protracted downturn.

AMP Capital chief economist Bevan Graham said the exchange rate will play an important role in where the Reserve Bank decides to end its tightening policy, though he anticipates governor Graeme Wheeler will push ahead with the already signalled rate hikes.

Graham expects the OCR to be at 3.75 percent this year, rising to 5 percent or 5.25 percent by the end of 2015. Wheeler hiked the benchmark a quarter-point to 2.75 percent last month, and traders have priced in a 97 percent chance of another rate hike next week.

AMP Capital is holding its benchmark allocation of local stocks, with the New Zealand equity market looking fully-priced relative to earnings, head of equities Guy Elliffe said.

Elliffe said he’s targeting stocks with low dividend risk, a strong competitive competition, realistic earnings growth expectations, and a strong balance sheet.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news