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

 

NZ dollar falls as Trump unveils tariffs on Chinese imports

NZ dollar falls as Trump unveils US$200 bln of new tariffs on Chinese imports

By Paul McBeth

July 11 (BusinessDesk) - The New Zealand dollar fell after US President Donald Trump's administration continued to ratchet up its trade war with China, unveiling a list of US$200 billion of imports facing a new 10 percent tariff.

The kiwi traded at 68.16 US cents as at 11.45am from 68.39 cents before reports of the pending announcement, and against Japan's currency, typically seen as a safe haven for investors, the New Zealand dollar fell to 75.55 yen from 76.09 yen.

US Trade Representative Robert Lighthizer today said the president ordered his office start work on imposing additional tariffs to the US$34 billion of Chinese imports that kicked in on Friday, as a response to China's retaliation, something he said China had "no justification for". The move prompted a sell-off in Wall Street futures, with the Dow Jones down 0.9 percent and the Standard & Poor's falling 0.8 percent, while New Zealand's S&P/NZX 50 index was more muted, edging up less than 0.1 percent to 9,027.31.

"The fact that he's (Trump) only prepared to release a list of US$200 billion (of import tariffs) means he is probably prepared to up the ante again," said Mark Johnson, a senior dealer foreign exchange at OMF in Wellington. "All these market moves this morning are attributable to Trump's preparation for increased tariffs."

The escalating trade war between the world's two biggest economies has been a major driver for financial markets and is a major risk for New Zealand's economy, which is self-dubbed an open trading nation and counts China as its biggest trading partner and the US as its third-biggest.

Johnson said the trade stoush should be more positive for the greenback, with recent interest rate increases by the Federal Reserve increasing the yield attraction for the world's reserve currency relative to other safe-haven assets such as the yen and Swiss franc.

At the same time, New Zealand is losing its yield appeal with the Reserve Bank set to keep the official cash rate at 1.75 percent for the foreseeable future. Johnson said if the June consumers price index falls short of expectations next week it may increase the number of bets for a cut to the OCR.

New Zealand's two-year swap rate fell about 2 basis points to 2.17 percent and 10-year swaps slipped 1 basis point to 3.02 percent.

Johnson said the kiwi has been in a downward trend for several months now and is capped in the short-term at 66.80 US cents. OMF is more inclined to sell the kiwi on rallies, he said.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

"Broad-Based Growth": GDP Rises 1 Percent In June Quarter

Gross domestic product (GDP) rose 1.0 percent in the June 2018 quarter, up from 0.5 percent last quarter, Stats NZ said today. This is the largest quarterly rise in two years. More>>

ALSO:

Judicial Review: China Steel Tarrif Rethink Ordered

On 5 July 2017 the Minister determined not to impose duties on Chinese galvanised steel coil imports. NZ Steel applied for judicial review of the Minister’s decision. More>>

Debt: NZ Banks Accelerate Lending In June Quarter

New Zealand's nine major lenders boosted lending at the fastest quarterly pace in almost two years as fears over bad debts subsided. More>>

ALSO:

Balance Of Trade: Annual Current Account Deficit Widens To $9.5 Billion

New Zealand’s current account deficit for the year ended June 2018 widened to $9.5 billion, 3.3 percent of GDP, Stats NZ said today. More>>

ALSO: