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

 


NZ dollar drops after RBNZ’s Wheeler talks intervention

NZ dollar drops after RBNZ’s Wheeler keeps currency intervention option open

By Paul McBeth

May 7 (BusinessDesk) - The New Zealand dollar fell after Reserve Bank governor Graeme Wheeler said he may intervene in currency markets if the kiwi stays strong in the face of falling dairy prices.

The local currency dropped to 86.89 US cents from 87.41 cents immediate before the speech, 87.47 cents at 8am and 86.91 cents yesterday. The trade-weighted index fell to 80.43 from a post-float high 81.21 in Northern Hemisphere trading and 80.72 yesterday.

RBNZ’s Wheeler told a dairy conference in Hamilton the currency was still overvalued, and “it would become more opportune for the Reserve Bank to intervene in the currency market to sell New Zealand dollars” if the kiwi remains high while commodity prices fall. The speech came after dairy prices at Fonterra Cooperative Group’s GlobalDairyTrade auction fell for a sixth time, fuelling speculation the world’s biggest dairy exporter will reduce its forecast payout to farmers.

“We suspect it was a reminder from the RBNZ that there are currency concerns in the economy and that they do have options,” said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. “It should take the edge off it (the kiwi dollar’s strength) a little bit – you’ve got to respect the central bank.”

The local currency rose against a weak US dollar in New York trading yesterday, touching a three-year high against the greenback.

Federal Reserve chair Janet Yellen is giving testimony to the Joint Economic Committee at Congress on Wednesday in Washington, and investors will be looking for insights into her thinking about the strength of recent US data.

Traders largely ignored New Zealand’s employment figures, which showed stronger than expected quarterly jobs growth of 0.9 percent and a record participation rate, which kept the unemployment rate unchanged at 6 percent.

The kiwi fell to 93 Australian cents from 93.63 cents yesterday after retail sales rose 1.2percent in March, below expectations. The Reserve Bank of Australia noted improving consumer demand in yesterday’s monetary policy review, which kept the key rate at 2.5 percent.

The local currency fell to 88.29 yen at 5pm in Wellington from 88.67 yen yesterday, and declined to 62.38 euro cents from 62.59 cents. It dropped to 51.17 British pence from 51.45 pence.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Govt Resisting Pressure To Pump More Cash Into Solid Energy

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

ALSO:

Lagest Ever Privacy Breach Award: NZCU Baywide Accepts “Severe” Censure In Cake Case

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

ALSO:

Scoop Business: PayPal Stops Processing Mega Payments; NZX Listing Still On

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

ALSO:

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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