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


NZ dollar falls as US-China trade war drags on

NZ dollar falls as US-China trade war drags on

By Jenny Ruth

Sept. 3 (BusinessDesk) - The New Zealand dollar fell on the combined weight of the ongoing trade war between China and the US and the local Reserve Bank’s dovishness.

The kiwi was trading at 62.83 US cents at 5pm in Wellington, off the day’s low at 62.67 cents but down from 63.09 at 7:50am. The trade-weighted index was at 70.52 from 70.69.

When the Tokyo market opened, traders started selling kiwi ”and that’s been the pattern lately,” says Imre Speizer, currency strategist at Westpac.

“It’s not based on any new news” but the currency continues to be weighed down by the US-China trade dispute and the dovishness of the central bank, Speizer says.

The Reserve Bank cut its official cash rate by 50 basis points to 1 percent a month ago, a magnitude of cut normally only seen in times of crisis.

As was widely expected, the Reserve Bank of Australia today left its cash rate unchanged at 1 percent.

Tim Kelleher, head of foreign exchange sales at Commonwealth Bank of Australia, says 30 out of 34 economists had expected no change.

The RBA last cut its cash rate by 25 basis points on July 3 and made a cut of the same magnitude on June 5. They were the first moves since August 2016.

“They were seen as reluctant cutters in the first place,” Kelleher says.

The RBA says its board “will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.”

Despite the RBA’s decision being widely anticipated, it lifted the Australian dollar and the kiwi was dragged a little higher in its trans-Tasman cousin’s wake.

The latest word on the US-China trade negotiations is that the two nations are struggling to agree when and where to meet next, let alone the basis for further talks.

Additional tariffs imposed by both sides kicked in this month and further tariffs are scheduled.

The South China Morning Post has quoted China’s Commerce Ministry spokesman, Gao Feng, as saying that “what should be discussed now is that the US must call off its plan to impose (additional) tariffs.”

Traders have been using the progress of China’s yuan as a proxy for progress in the trade talks, according to Reuters. The People’s Bank of China has been allowing the currency to gradually depreciate against the US dollar.

PBOC set the mid-point for the yuan at 7.0884 to the US dollar today after allowing it to rise above 7 for the first time since 2008 early last month.

The New Zealand dollar was trading at 93.65 Australian cents from 93.88, at 52.20 British pence from 52.27, at 57.43 euro cents from 57.50, at 66.79 yen from 66.94 and at 4.5123 Chinese yuan from 4.5140.

The two-year swap rate fell to a bid price of 0.8925 percent from 0.8969 yesterday. The 10-year swaps rose to 1.1950 percent from 1.1850.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Up 0.5% In June Quarter: Services Lead GDP Growth

“Service industries, which represent about two-thirds of the economy, were the main contributor to GDP growth in the quarter, rising 0.7 percent off the back of a subdued result in the March 2019 quarter.” More>>


Pickers: Letter To Immigration Minister From Early Harvesting Growers

A group of horticultural growers are frustrated by many months of inaction by the Minister who has failed to announce additional immigrant workers from overseas will be allowed into New Zealand to assist with harvesting early stage crops such as asparagus and strawberries. More>>


Non-Giant Fossil Disoveries: Scientists Discover One Of World’s Oldest Bird Species

At 62 million-years-old, the newly-discovered Protodontopteryx ruthae, is one of the oldest named bird species in the world. It lived in New Zealand soon after the dinosaurs died out. More>>

Rural Employers Keen, Migrants Iffy: Employment Visa Changes Announced

“We are committed to ensuring that businesses are able to get the workers they need to fill critical skills shortages, while encouraging employers and regions to work together on long term workforce planning including supporting New Zealanders with the training they need to fill the gaps,” says Iain Lees-Galloway. More>>


Marsden Pipeline Rupture: Report Calls For Supply Improvements, Backs Digger Blame

The report makes several recommendations on how the sector can better prevent, prepare for, respond to, and recover from an incident. In particular, we consider it essential that government and industry work together to put in place and regularly practise sector-wide response plans, to improve the response to any future incident… More>>