NZ dollar gains as Fonterra affirms milk price, announces Chinese joint venture
By Paul McBeth
Aug. 27 (BusinessDesk) - The New Zealand dollar rose after Fonterra Cooperative Group affirmed its forecast milk price payout to farmers, and unveiled a $615 million joint venture with China's Beingmate.
The kiwi rose to 83.62 US cents at 5pm in Wellington from 83.24 cents at 8am and 83.41 cents yesterday. The trade-weighted index increased to 78.96 from 78.74 yesterday.
Fonterra today affirmed its 2015 forecast farmgate payout of $6 per kilogram of milk solids, and announced an Australian-based tie-up with Beingmate to produce infant formula for the Chinese market. The announcements eased investors' fears the world's biggest dairy exporter would announce more bad news amid falling local commodity prices.
"People were getting ahead of themselves with the market expecting a possibly negative announcement," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. Still, "I wouldn't expect us to strengthen too much further - the trend is quite clear."
The US dollar rose to a 13-month high yesterday as upbeat consumer confidence and manufacturing reports stoked expectations the Federal Reserve will start raising interest rates sooner and faster than previously anticipated.
ANZ's Tuck said "everything is pointing to the US dollar being the currency of choice."
Government figures today showed New Zealand food prices fell on an annual basis in July, indicating the Reserve Bank might not have to hike interest rates again with fewer inflationary pressures creeping into the economy.
The local currency traded at 89.70 Australian cents from 89.75 cents yesterday, and increased to 86.95 yen from 86.63 yen. It advanced to 63.53 euro cents from 63.16 cents yesterday, and rose to 50.51 British pence from 50.27 pence.