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NZ dollar gains on bargain hunting ahead of RBNZ

NZ dollar gains on bargain hunting ahead of RBNZ rate decision

By Jenny Ruth

Feb. 11 (BusinessDesk) - The New Zealand dollar rose against all major currencies in what dealers describe as “bargain hunting” after a horror week last week.

The kiwi was trading at 67.56 US cents at 5pm in Wellington from 67.40 at 8am. Last week, the currency traded as high as 68.96 US cents before falling as low as 67.30 in New York trading on Friday. The trade weighted index was at 73.37 points from 73.11.

The head of external foreign exchange sales at ASB Bank, Tim Kelleher, says the market is effectively treading water in the lead up to the Reserve Bank’s monetary policy statement due Wednesday afternoon.

Nobody is expecting governor Adrian Orr will move his official cash rate, currently at its record low of 1.75 percent where it has sat since November 2016.

Instead, the market will be hanging off the “tone” of Orr’s statement and whether he changes his language from an each-way bet on which direction the OCR will likely move next and how far down the track. In November, when he delivered the last MPS, Orr expected to hold the OCR steady into 2020.

But in the meantime, Asian markets “are having a pretty good day all round and we seem to be ignoring everything in the US,” Kelleher says.

Talks to avert a second US government shutdown between Republicans and Democrats in Congress have reportedly broken down. Nevertheless, the negotiators have until Friday night to try to avert another disruption so soon after the previous 35-day shutdown, the longest in US history.

The bargain hunting was sufficient to lift the kiwi against its Australian counterpart as well, although the Australian dollar is also enjoying a rebound on the back of iron ore prices reaching their highest level in four-and-a-half years.

The New Zealand dollar is trading at 95.25 Australian cents from 94.96, at 52.26 British pence from 52.06, at 59.67 euro cents from 59.52, at 74.30 yen from 74.26 and at 4.5775 Chinese yuan from 4.5445.

The two-year swap rate rose to 1.8097 percent from 1.7808 on Friday; the 10-year rate climbed to 2.4000 percent from 2.3925.

(BusinessDesk)

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