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NZ dollar falls after strong US data, China tightens lending

NZ dollar falls after strong US data, China tightens lending policy

By Paul McBeth

Dec. 13 (BusinessDesk) – The New Zealand dollar fell below 75 U.S. cents as stronger-than-expected American data stoked investors’ appetite for the greenback, while tighter lending criteria for Chinese banks eroded demand for commodity currencies like the kiwi and Australian dollars.

The yield on U.S. 10-year Treasuries rose 32 basis points last week, boosting sentiment for the greenback after American consumer confidence hit a six-month high and the trade balance for the world’s biggest economy was smaller deficit than expected. Stocks on Wall Street extended gains with the Standard & Poor’s 500 index closing at its highest level since September 2008 and the Nasdaq Composite reporting its best finish since December 2007. Adding to the downbeat tone for commodity currencies was a 50 basis point hike in the reserve requirement for Chinese banks, as the People’s Bank of China tries to rein in accelerating inflation.

“The tighter policy is bringing China back to normal, and if it keeps growing way above trend, it needs to do more abrupt policy measures,” said Imre Speizer, market strategist at Westpac Banking Corp. “We’re probably going to have to wait until Asian markets open to see the extent” of the tougher Chinese regulations’ impact on the kiwi, he said.

The kiwi fell to 74.71 U.S. cents from 75.03 cents on Friday in New York, and dropped to 67.60 on the trade-weighted index of major trading partners’ currencies from 67.79. It declined to 62.66 yen from 62.79 yen last week, and slipped to 75.84 Australian cents from 76.09 cents. It retreated to 56.45 euro cents from 56.58 cents on Friday in New York, and was down to 47.25 pence from 47.51 pence.

Speizer said the currency may trade between 74 U.S. cents and 75.30 cents today, with the Asian markets reaction to the Chinese regulations the main event.

(BusinessDesk)

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