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

 

NZ dollar off early highs but rangebound

NZ dollar off early highs but rangebound ahead of inflation data

By Rebecca Howard

July 17 (BusinessDesk) - The New Zealand dollar was off its highs after some comments from a central bank deputy governor and ahead of Tuesday's second-quarter domestic inflation data.

The kiwi traded at 73.30 US cents as at 5pm in Wellington versus 73.42 US cents as at 8am in Wellington and 73.45 cents in late New York trading on Friday. It got a solid lift overnight Friday from weak US inflation, retail sales and consumer sentiment figure but ground lower over the session. The trade-weighted index was at 77.97 from around 78.11 late Friday.

"It's still range-bound but it's off its highs," said ANZ senior economist Phil Borkin. Some early risk aversion in Asian equity markets coupled with comments from Reserve Bank deputy governor Geoff Bascand took some of the shine off, he said.

Bascand said a large improvement in New Zealand’s net foreign liabilities as a share of gross domestic product (NFL-GDP) makes the economy less vulnerable to shocks. He said one "striking feature" of the improvement is that it has occurred despite the real exchange rate being high over much of the period. Typically a higher exchange rate would contribute to widening the current account deficit but "the improvement in the NFL-GDP suggests that the exchange rate might be more sustainable than previously assumed," he said.

In some ways that was an acknowledgement, the currency needs to be where it is but he added the caveat that from a growth point of view, a lower exchange rate would help rebalance growth towards the tradables sector, said Borkin.

"The kiwi was already under some pressure and that helped it along its way," said Borkin.

He said, however, the main event risk for the currency is tomorrow's domestic inflation data. Economists expect inflation was 0.2 percent in the three months ended June 30, for an annual rate of 1.9 percent, according to the median in a poll of 15 economists surveyed by Bloomberg. That would be below the central bank's projection of inflation of 0.3 percent in the second quarter for an annual rise of 2.1 percent.

"Any surprise will see a bit of currency volatility, but I'd be surprised if it pushes on too much unless its a really significant surprise," said Borkin.

The kiwi slipped to 63.93 euro cents from 64.06 cents in New York on Friday and traded at 82.53 yen from 82.67 yen. It fell to 4.9615 yuan from 4.9756 yuan and traded at 55.97 British pence from 56.11 pence. The kiwi traded at 93.81 Australian cents from 93.75 cents.

New Zealand's two-year swap rate fell 3 basis points to 2.23 while the 10-year swaps fell 2 basis points to 3.33 percent.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fund For PPP Plans: Govt Embraces Targeted Rates To Spur Urban Infrastructure

The government's latest response to the Auckland housing shortage will see central government and private sector firms invest in 'special purpose vehicles' to fund essential roading, water and drains that Auckland Council can't fund without threatening its credit rating. More>>

ALSO:

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fletcher Whittled: Fletcher Dumps Adamson In Face Of Dissatisfaction

Fletcher Building has taken the unusual step of dumping its chief executive, Mark Adamson, as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. More>>

ALSO:

No More Dog Docking: New Animal Welfare Regulations Progressed

“These 46 regulations include stock transport, farm husbandry, companion and working animals, pigs, layer hens and the way animals are accounted for in research, testing and teaching.” More>>

ALSO:

Employment: Most Kiwifruit Contractors Breaking Law

A Labour Inspectorate operation targeting the kiwifruit industry in Bay of Plenty has found the majority of labour hire contractors are breaching their obligations as employers. More>>

ALSO: