NZ dollar gains as govt flags bigger surpluses
NZ dollar gains as govt flags bigger surpluses, faster growth; US data looms
By Paul McBeth
May 15 (BusinessDesk) - The New Zealand dollar rose after Finance Minister Bill English signalled bigger fiscal surpluses were coming in an economy seen to be growing faster than previously thought, and ahead of US data.
The kiwi advanced to 86.79 US cents at 5pm in Wellington from 86.62 cents at 8am, almost unchanged from 86.60 cents yesterday. The trade-weighted index rose to 80.69 from 80.47 yesterday.
New Zealand’s government anticipates the operating balance before gains and losses will be a surplus of $372 million in the year ending June 30, 2015, wider than the $86 million projected in the December half-year forecast, rising to $3.5 billion 2018.
The optimistic outlook for the Crown accounts come as the economy is forecast to grow 4 percent in the year ending March 31, 2015, the fastest since growth of 4.2 percent in 2004 and an improvement on the 3.6 percent pace the Treasury was projecting back in December. The budget was well-received by rating agencies Standard & Poor’s and Moody’s Investors Service, meeting both their expectations.
“The budget was pretty stock-standard – I certainly don’t see how Labour (the major opposition party) can attack it,” said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. “There’s pretty good support at 86 (US cents) and sellers above 87 – we’re going nowhere fast.”
The kiwi may come under pressure with US data including inflation, unemployment benefit claims and manufacturing figures and the Philadelphia Federal Reserve’s business outlook survey.
Alex Hill, head of dealing at HiFX in Auckland, said the kiwi is pushing towards the top of recent ranges ahead of the US data, and would need “terrible news out of the States” to break out of its the band.
The kiwi dollar rose to 92.53 Australian cents from 92.14 cents yesterday, and was little changed at 88.37 yen from 88.45 yen. It advanced to 63.29 euro cents from 63.14 cents yesterday, and climbed to 51.74 British pence from 51.38 pence.