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


NZ dollar rises to 2-week high as Fed minutes fuel QE3 bets

NZ dollar rises to 2-week high as Fed minutes fuel QE3 expectations

By Paul McBeth

Aug. 23 (BusinessDesk) - The New Zealand dollar rose to a two-week high in local trading, extending its rally after minutes for the last Federal Reserve policy makers' meeting fuelled expectations the central bank will embark on a third round of money printing to revive the world's biggest economy.

The kiwi rose as high as 81.85 US cents, trading at 81.71 cents at 5pm in Wellington from 81.32 cents at 8am and 80.84 cents yesterday. The trade-weighted index advanced to 73.16 from 72.73 yesterday.

The Dollar Index, a measure of the greenback against a basket of currencies, dropped 0.7 percent to a two-month low 81.42 as traders ditched the world's reserve currency amid heightened expectations the Fed will inject more stimulus in the immediate future. Minutes of the Federal Open Market Committee’s July 31-to-Aug. 1 meeting said many committee members judged more quantitative easing was "warranted fairly soon" unless the US economy shows signs of "substantial and sustainable" improvement.

"You can't fight the Fed," said Mike Jones, currency strategist at Bank of New Zealand in Wellington. "The kiwi had a head of steam up all day."

Jones said New Zealand's currency may return to the 81 US cents to 84 cents range it traded in during February and March this year with the prospect of more asset purchases by the Fed, which will debt the greenback's fortunes.

The Fed minutes may have stolen the limelight from next week's central bank summit in Jackson Hole, Wyoming, leaving chairman Ben Bernanke little more to add, Jones said.

Traders ignored a weak Chinese manufacturing indicator, with the HSBC purchasing manager's index preliminary reading falling to 47.8 this month from July's 49.3. If that's confirmed, it would be the weakest level since November, and may signal the world's second biggest economy is in for a harder landing than expected.

"China's PMI was genuinely weak and had very few redeeming features as growth is still stuttering," Jones said. The kiwi dollar strengthened to 5.1876 yuan from 5.1682 yuan yesterday.

German Chancellor Angela Merkel and French President Francois Hollande will meet with Greek Prime Minister Antonis Samaras on Friday to discuss the Mediterranean nation's 130 billion euro bail-out ahead of next month's official update with the European Central Bank, International Monetary Fund and European Commission.

Greece's Samaras is seeking a two-year extension to help bed in the harsh spending cuts set as conditions of the lifeline.

The kiwi climbed to 65.13 euro cents from 64.87 cents yesterday and was little changed at 64.14 Japanese yen from 64.10 yen. The New Zealand dollar rose to 77.67 Australian cents yesterday from 77.35 cents and increased to 51.40 British pence from 51.22 pence.


© Scoop Media

Business Headlines | Sci-Tech Headlines


SEA: Another First For Solar Energy In New Zealand

The Sustainable Energy Association NZ (SEANZ) congratulates Sunergise on the commissioning of the Sunergise Kapuni Solar Power Plant, the largest in the country... More>>

Accenture: More Boomers Than Zoomers Want To Work From Home

While often associated with tech savvy Gen Z or Zoomers, new global research from Accenture shows that the push for more flexible working environments is being led by Gen Xers and Baby Boomers... More>>

Maritime Union: Deepening Supply Chain Crisis Requires Action

Maritime Union of New Zealand National Secretary Craig Harrison says the global COVID-19 pandemic exposed pre-existing weaknesses in our logistics sector, and created enormous problems... More>>

Banking: Westpac New Zealand To Remain Part Of Westpac Group

Westpac New Zealand Limited (WNZL) remains part of Westpac Group following a decision for the two businesses not to demerge. Westpac Group Chief Executive Officer, Peter King, said: “After a detailed review, we believe a demerger of the WNZL business would not be in the best interests of shareholders... More>>

Mercury: Enters Into Binding Agreements To Acquire Trustpower’s Retail Business

Mercury NZ Limited (Mercury) has announced that it has entered into binding agreements with Trustpower Limited (Trustpower, NZX:TPW) to acquire Trustpower’s retail business for NZ$441 million... More>>


ASB: New Zealanders Missing Out On Hundreds Of Millions In KiwiSaver Government Contributions

New Zealanders have just over a week to ensure they’re eligible for the maximum annual government KiwiSaver contribution... More>>