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NZ dollar recovers after RBA governor jawbones down Aussie

NZ dollar stages a recovery after RBA governor jawbones down Aussie

By Rebecca Howard

July 21 (BusinessDesk) - The New Zealand dollar is heading for a 1 percent weekly gain against the greenback and moved higher against the Aussie after that nation's central bank quelled the view that rate hikes might be on the horizon while New Zealand's finance minister said the economy is performing well with the dollar at its current level.

The Kiwi was trading at 74.22 US cents as at 5pm in Wellington from 74.05 cents as at 8am and 73.45 cents last Friday and was at 94.00 Australian cents as at 5pm from 92.51 cents late yesterday and 93.75 cents a week ago.

The Australian dollar lost ground when Reserve Bank of Australia deputy governor Guy Debelle underscored "the fact that other central banks increase their policy rates does not automatically mean that the policy rate here needs to increase" and talked down the Aussie dollar, in a speech published on the central bank's web site. The Aussie spiked higher this week in the wake of the RBA's minutes that led to speculation the Aussie central bank might move to lift rates sooner than anticipated.

Finance Minister Steven Joyce said he didn't have an opinion on the exact rate of the New Zealand dollar in an interview with Bloomberg but "I am just saying that the New Zealand economy and New Zealand businesses are performing very well at these current levels."

"Joyce came out and said he's not worried about the currency and the Aussie government came out and said the opposite," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

The kiwi traded at 63.81 euro cents from 63.80 cents and advanced to 83.07 yen from 82.25 yen. It traded at 57.22 British pence from 56.40 pence and gained to 5.0210 yuan from 4.9681 yuan. The trade-weighted index rose to 78.59 from 77.82 yesterday.

Looking ahead, Kelleher said there was no US data later in the global trading day so the focus would be on US politics.

New Zealand's two-year swap rate fell 2 basis points to 2.21 while the 10-year swaps fell 5 basis points to 3.26 percent.

(BusinessDesk)

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