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

 


NZ dollar slips as Key says kiwi over-valued

NZ dollar slips as Key says kiwi over-valued, Fonterra forecast looms

By Jonathan Underhill

July 28 (BusinessDesk) - The New Zealand dollar fell to a month-low after Prime Minister John Key said he agreed with the Reserve Bank that the currency is over-valued and as traders anticipate an announcement from Fonterra Cooperative Group tomorrow which is expected to include a cut to the milk price forecast.

The kiwi fell to 85.31 US cents at 5pm in Wellington, from 85.63 cents at 8am and from 85.51 cents on Friday in New York. The trade-weighted index fell to 79.66 from 79.94 at the New York close.

Economists at ASB expect Fonterra to revise down its milk price payout for the 2014/15 season to about $6.20 per kilogram of milk solids, from its initial estimate of $7/kgMS. Falling prices of dairy products are expected to contribute to a sharp decline in the nation's terms of trade from a 40-year high the bank said. Meantime, Key told his post-Cabinet media conference that he concurred with the central bank that the kiwi was too strong, a view expressed by governor Graeme Wheeler when he raised the official cash rate to 3.5 percent last week while signalling a pause in the tightening cycle.

"The kiwi came off after the RBNZ and it is not bouncing," said Martin Rudings, senior foreign exchange dealer at OMF. "The offshore market is showing it is still a bit long (kiwi). It's likely to go lower in the short term."

Asked if he was comfortable if the Reserve Bank intervened, Key said: "Yes. If they choose to do that they have a mandate under which to intervene."

"I think as a long-term policy tool they (intervention) are not very effective, but they can have a short-term benefit," Key said. "I would agree with the governor that the New Zealand dollar is overvalued if you compared it against a reduction in commodity prices. So you've seen some reduction since he's made those comments."

The US dollar index, a measure of the greenback against a basket of currencies, is at its highest level since early February as traders await offshore news this week including the Federal Open Market Committee meeting, which is expected to continue the move away from extraordinary policy, the first reading of second-quarter US gross domestic product, manufacturing and non-farm payrolls for July.

The local currency traded at 86.88 yen from 87.07 yen on Friday in New York, and edged down to 90.87 Australian cents from 90.99 cents. It traded at 63.55 euro cents from 63.65 cents last week, and was little changed at 50.27 British pence from 50.37 pence.

(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