NZ dollar heads for 1.1% weekly gain
NZ dollar heads for 1.1% weekly gain as RBNZ takes softer approach to rate cuts
By Paul McBeth
July 24 (BusinessDesk) - The New Zealand dollar
is heading for a 1.1 percent gain against the greenback this
week as the Reserve Bank's approach to lower interest rates
disappointed some investors wanting more
aggression.
The kiwi increased to 65.82 US cents at
5pm in Wellington from 65.87 cents last Friday in New York.
It was down from 66.10 cents at 8am and 66.29 cents
yesterday as weak Chinese manufacturing figures and falling
commodity prices weighed on the outlook for Australia and
New Zealand's exports. The trade-weighted index fell to
70.21 from 70.50 yesterday, and is heading for a 1.2 percent
weekly gain.
A BusinessDesk survey of 11 currency advisers on Monday predicted the kiwi would trade between 63.50 US cents and 67.05 cents. Six expected the kiwi to gain, four bet it would fall and one said it would stay largely unchanged.
The kiwi got a boost yesterday when Reserve
Bank governor Graeme Wheeler lowered the official cash rate
25 basis points to 3 percent, and dropped his reference to
criteria warranting intervention in foreign exchange
markets, while reiterating his desire for a weaker New
Zealand dollar. Wheeler will deliver a speech on the New
Zealand economic outlook next week.
"The wash-up last
night basically suggested that the New Zealand dollar was
fairly priced into what the RBNZ did - a 25 basis point cut,
and further easing bias, but not an overly aggressive one,"
said Sam Tuck, senior FX strategist at ANZ Bank New Zealand
in Auckland. "The kiwi has done its dash for the moment and
is relatively happy to consolidate."
ANZ's Tuck
expects the kiwi will continue to decline as falling prices
for hard and soft commodities weigh on currencies such as
the Australian and New Zealand dollars.
Government data today showed New Zealand posted an unexpected trade deficit in the month of June, which is typically a surplus, though bigger export receipts than anticipated helped allay any fears about the figures.
The kiwi rose to 90.24
Australian cents from 89.85 cents yesterday, and fell to
4.0871 Chinese yuan from 4.1161 yuan. The preliminary China
Caixin purchasing managers' index unexpectedly fell today,
putting downward pressure on commodity prices on fears a
slowing Chinese economy will reduce global demand for raw
materials.
The New Zealand Debt Management Office sold $200 million of bonds maturing in April 2020, attracting bids worth $1.06 billion. The bonds pay annual interest of 3 percent, and sold at an average yield of 2.73 percent.
New Zealand's two-year swap rate slipped to 2.87 percent at 5pm in Wellington from 2.89 percent yesterday, and the 10-year swap rate declined to 3.65 percent from 3.68 percent.
The kiwi declined to 59.99 euro cents from 60.58 cents yesterday, and was almost unchanged at 42.43 British pence from 42.42 pence. It dropped to 81.56 yen from 82.20 yen yesterday.
(BusinessDesk)