NZ dollar jumps to 6-month high as QE3 weighs on greenback, stokes equity rally
By Paul McBeth
Sept. 14 (BusinessDesk) - The New Zealand dollar climbed to a six-month high in local trading after the Federal Reserve's programme to print more money weighed on the greenback while stoking a rally in global equity markets.
The kiwi rose to 83.45 US cents at 5pm in Wellington from 83 cents at 8am and 82.19 cents yesterday. The trade-weighted index rose to 73.67 from 72.86 yesterday, and is heading for a weekly gain of 2.2 percent. The kiwi is heading for a 2.8 percent weekly gain against the greenback.
Stocks across Asia followed US and European markets higher after Fed chairman Ben Bernanke unveiled an open-ended plan to $40 billion of mortgage-backed securities a month in a bid to revive flagging growth in the world's biggest economy.
Asia-wide sentiment was bolstered after Standard & Poor's upgraded South Korea's sovereign credit rating one notch to A-plus amid easing political tensions with its neighbours. Australia's S&P/ASX 200 index was up 1.3 percent in afternoon trading, Japan's Nikkei 225 index gained 2.1 percent, Hong Kong's Hang Seng index was up 2.7 percent and Korea's Kopsi index advanced 2.8 percent.
"The kiwi is standing in front of a freight train at the moment," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. "The kiwi did quite a lot of work between 83 and 84 US cents and there's quite strong resistance there."
The New Zealand currency's strength come a day after the Reserve Bank kept the official cash rate at 2.5 percent, and pushed out its forecast track for the 90-day bank bill rate, seen as a proxy for the benchmark interest rate.
The Bank of Korea unexpectedly kept its seven-day repurchase rate at 3 percent yesterday, and Bank Indonesia also held its reference rate unchanged at a record-low 5.75 percent. The kiwi climbed to 932.5 Korean won from 927.3 won yesterday, and advanced to 7952.19 Indonesian rupiahs from 7873.12.
The New Zealand dollar rose to 78.84 Australian cents from 78.39 cents yesterday and increased to 51.49 British pence from 50.97 pence. The kiwi climbed to 64.04 euro cents from 63.55 cents and advanced to 64.75 yen from 63.85 yen yesterday.