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


NZ dollar jumps above 88 US cents after Fitch upgrades

NZ dollar jumps above 88 US cents after Fitch upgrades outlook to positive

By Tina Morrison

July 9 (BusinessDesk) - The New Zealand dollar jumped above the 88 US cent level it has been flirting with for the past few weeks after credit ratings agency Fitch Ratings reaffirmed the country's AA rating and upgraded its outlook to positive from stable.

The kiwi reached 88.05 US cents overnight, its highest level since August 2011 when it touched a record 88.40 cents. The local currency was trading at 87.83 US cents at 8am in Wellington, from 87.63 cents at 5pm yesterday. The trade-weighted index rose to 81.64 from 81.51 yesterday.

The New Zealand dollar has gained almost 6 cents against the US dollar so far this year as investors are lured by higher interest rates in an expanding stable economy. The central bank has increased the benchmark interest rate three times this year to 3.25 percent and is expected to hike again this month in an attempt to slow inflation, in comparison with most other major economies where interest rates remain at record lows.

"As one of the only two currencies with any appreciable yield in the advanced industrialised universe, the kiwi has been the darling of the yield chasers and (the) upgrade by Fitch will only serve to reinforce its strength," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York, said in a note. "With a 3.25 percent yield and a reaffirmed AA rating, the NZD/USD remains one of the pre-eminent credits in the G-20 basket and (the) unit should remain well bid for the foreseeable future especially if the economic data does not show much deteriorating from the high exchange rate and US 10-year yields remain depressed below (the) 2.75 percent mark."

The kiwi's breakout above the key 88 cent figure puts the highs of 2011 "squarely in view", Schlossberg said.

"The high price of the currency is sure to raise the ire of RBNZ," he said.

Today, Reserve Bank governor Graeme Wheeler is speaking at a breakfast gathering in Auckland, although the speech won't be released for publication. Deputy governor John McDermott is speaking to the Wellington Employers' Chamber of Commerce on the concept of potential output and its place in the monetary policy framework of an inflation targeting central bank. He will also discuss broad drivers of growth in potential output and the best contribution that monetary policy can make towards strong growth. His speech will be released publicly at 10am.

The New Zealand dollar rose to 93.46 Australian cents from 93.35 cents yesterday, increased to 64.55 euro cents from 64.41 cents, gained to 51.28 British pence from 51.16 pence and was little changed at 89.22 yen from 89.21 yen.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Oceans: NOAA Declares Third Ever Global Coral Bleaching Event

As record ocean temperatures cause widespread coral bleaching across Hawaii, NOAA scientists confirm the same stressful conditions are expanding to the Caribbean and may last into the new year, prompting the declaration of the third global coral bleaching event ever on record. More>>

Scoop Business: A Decade Of Government Pre-Seed Investment

More publicly-funded science is being commercialised after a decade of government ‘pre-see’d investment, according to an independent review. More>>


Solid Energy: Plan To Shut Unprofitable Huntly East Mine

Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine and lay off 65 staff after deciding the site stands "no chance whatsoever" of finding a buyer. More>>


E Tū: Merger Creates NZ's Biggest Private Sector Union

E tū has been created by the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. It represents more than 50,000 working New Zealanders in industries as diverse as aviation, construction, journalism, food manufacturing, mining and cleaning. More>>


Internet: NZ Govt Lifts Target Speeds For Rural Broadband

The government has lifted its expectations on faster broadband speeds for rural New Zealand as it targets increased spending on research and development in the country's information and communications technology sector, which it sees as a key driver for export growth. More>>


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news