Reports of weakening Chinese yuan weigh on Australia

Thursday 29 December 2016 08:51 AM

NZ dollar gains vs. Aussie as reports of weakening Chinese yuan weigh on Australia

By Paul McBeth

Dec. 29 (BusinessDesk) - The New Zealand dollar gained against its trans-Tasman counterpart as reports of a depreciating Chinese yuan weighed on investors' outlook for the Australian economy.

The kiwi increased to 96.24 Australian cents as at 8am from 96 cents yesterday, and rose to 4.8107 Chinese yuan from 4.8087 yuan.

The People's Bank of China rejected reports the yuan crossed the 7 yuan per US dollar level seen as a psychological barrier, calling the stories "irresponsible". The yuan recently traded at 6.9559, near an eight-and-a-half year high, and last traded above 7 in May 2008. The world's second-biggest economy is facing a slowing pace of economic growth, which has stoked concerns about its impact on Australian trade with China.

"There's a lot of rumours about China overnight again and it's probably not helping the Aussie dollar, with talk about the Chinese yuan crossing the psychological barrier of seven," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. "The kiwi's outperformed itself again."

The local currency was little changed at 69.16 US cents from 69.14 cents yesterday, as the greenback continued to rally on the expectation rising US interest rates will accompany president-elect Donald Trump's plans for infrastructure spending and tax reform when he takes office next month.

The local currency gained to 66.29 euro cents from 66.04 cents yesterday and advanced to 56.59 British pence from 56.26 pence. It fell to 81.06 yen from 81.31 yen yesterday. The trade-weighted index rose to 77.41 from 77.26.

(BusinessDesk)

© Scoop Media