NZ dollar remains steady as trade war fears ease
By Rebecca Howard
March 27 (BusinessDesk) - The New Zealand dollar dipped slightly but continued to hover around a 2-week high against the greenback as Asian markets were cheered by hopes that a global trade war might be averted.
The kiwi traded at 72.88 US cents at 5pm in Wellington from 72.96 US cents at 8am and 72.73 cents late yesterday. The trade-weighted index was at 74.53 from 74.64 yesterday.
Markets were cheered after reports Chinese and U.S. officials were busy negotiating behind the scenes to avert an all-out trade war. "The risk on sentiment overnight kind of set the scene and there is a glimmer of hope that some compromise is brewing," said Westpac Imre Speizer. "Things don't seem as bad as they did a couple of days ago on the global trade front," he said, noting that equity markets had rallied strongly.
Investors had been spooked by a US threat to impose tariffs of up to US$60 billion on Chinese goods and China's announcement it would impose tariffs on US$3 billion of US exports, its first firm move in retaliation.
Speizer said the kiwi is also benefiting as overall the market remains quite negative toward the greenback as it "continues to factor in a pretty hefty risk premium to the US dollar," which is also helping lift the kiwi.
With little data on the horizon, the kiwi will continue to get pushed around by events offshore.
The kiwi dollar rose to 94.14 Australian cents from 94.12 cents yesterday. It traded at 51.20 British pence from 51.33 pence and fell to 58.52 euro cents from 58.77 cents. It fell to 4.5621 yuan from 4.5909 yuan and gained to 76.97 yen from 76.29 yen.
New Zealand's two-year swap rate was unchanged at 2.23 percent and the 10-year swap rate rose 1 basis point to 3.12 percent.