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

 

NZ dollar buoyed by Fonterra plans to expand capacity

NZ dollar buoyed by Fonterra plans to expand capacity, form Chinese partnership

By Tina Morrison

Aug. 28 (BusinessDesk) - The New Zealand dollar rose after Fonterra Cooperative Group yesterday said it would maintain its milk price forecast, expand its local processing capacity and form a partnership to help sell its products in China, New Zealand's largest trading partner.

The kiwi gained to 83.75 US cents at 8am in Wellington, from 83.67 cents at 5pm yesterday. The trade-weighted index was at 78.98 from 79 yesterday.

The local currency has jumped half a US cent in the past 24 hours following the announcement from Fonterra, the world's largest dairy exporter. Dairy is New Zealand's largest commodity export and traders had been concerned the company could have lowered its $6 per kilogram of milk solids forecast for 2015 as increased supply weighs on prices.

"The kiwi was the star of the night as the announcement by dairy giant Fonterra that it's entering a joint venture to meet demand for infant formula in China was met with approval by the market," Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management in New York, said in a note. The investment "suggests that Fonterra may be able to smooth out its delivery problems and also indicates that its stream of income from China - which is a significant contributor to the New Zealand economy - is likely to remain in place."

The kiwi may target 84 US cents, Schlossberg said.

The local currency's gain was assisted by a broadly weaker US dollar overnight, with the US dollar index declining from its highest level in more than a year.

The New Zealand dollar edged lower to 89.69 Australian cents from 89.77 cents yesterday ahead of Australian data on capital expenditure today. While data for the second quarter may be weaker reflecting a decline in mining investment, the currency affect could be muted as capex forecasts for the coming year may be revised higher, Kymberly Martin, senior market strategist at Bank of New Zealand, said in a note.

The kiwi slipped to 63.47 euro cents from 63.57 cents yesterday. The European Central Bank meets next week amid elevated expectations of additional stimulus following ECB President Mario Draghi’s comments about the region’s declining inflation in Jackson Hole last week. However, the ECB is unlikely to take new policy action next week unless August inflation figures due tomorrow show the euro zone sinking significantly towards deflation, Reuters reported, citing unnamed ECB sources.

"The barrier to QE is still very high," said one of the sources, all of whom requested anonymity, adding that discussion at the meeting was expected to centre on reinforcing existing policy measures of credit easing and liquidity provision, according to Reuters.

The local currency was little changed at 50.53 British pence from 50.55 pence yesterday, and at 87.01 yen from 87.02 yen.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Income Equality: Time To Double-Down On Cutting CEO Salaries

With reports of a slow-down in CEO pay rises last year, it’s time for Kiwi corporates to double down on cutting excessive salaries to ensure this is a trend not an accident, said Peter Malcolm, spokesperson for the income equality project Closing the Gap. More>>

Manawatu-Whanganui Projects: PGF Top-Up To Rural Broadband Roll-Out

The government has effectively raided the $3 billion Provincial Growth Fund to top up the budget for the second phase of its rural broadband initiative, filling in mobile 'black spots' and ensuring broadband is available to marae that don't have access now. More>>

ALSO:

Other Windy Cities: Auckland-Chicago Named A Top 10 ‘Most Exciting’ New Route

The inclusion of Auckland-Chicago on Lonely Planet’s Where to fly in 2019? The 10 most exciting new flight routes list comes just two weeks before Air New Zealand prepares to celebrate its inaugural flight to Chicago’s O’Hare International Airport on 30 November. More>>

Deadly Strain: ESR Ups Its Reporting On Meningococcal Disease

The increasing number of cases of Group W Meningococcal disease (MenW) has prompted ESR to increase its reporting on the disease to the Ministry of Health. ESR has upped its reporting to weekly. More>>

ALSO: