Celebrating 25 Years of Scoop
Special: Up To 25% Off Scoop Pro Learn More
Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

NZ dollar gains as global stocks rally

NZ dollar gains as global stocks rally, risk aversion dims

By Paul McBeth

Dec. 9 – The New Zealand dollar extended its gains for a second day as a rally in global stock markets encouraged investors to return to higher-yielding, or riskier assets.

Stocks on Wall Street and in Europe advanced after U.S. President-elect Barack Obama proposed the biggest public works program since the 1950s to kick-start the world’s largest economy. The Dow Jones Industrial Average rose 3.9%, prices of oil and copper rose, and resources companies including BHP Billiton, the world’s largest miner, rallied. Lawmakers in the U.S. also made progress on a US$15 billion rescue package for automakers.

“There’s potential for the kiwi to rebound,” said Philip Borkin, economist at ANZ National Bank. The kiwi’s gain reflected “the same old equities correlation” and may extend its gains “if the automakers’ package comes through.”

The New Zealand dollar rose to 54.61 U.S. cents from 54.49 cents yesterday, and fell to 50.65 yen from 59.98 yen. It rose to 82.30 Australian cents from 81.66 cents yesterday, and fell to 42.21 euro cents from 42.25 cents.

Borkin said the kiwi may trade between 53.95 U.S. cents and 54.95 cents today.

In the U.S., Congress and President George W. Bush are close to finalising the details of the rescue package for the auto industry. General Motors Corp. and Chrysler LLC have almost exhausted their cash reserves, and Ford Motor Co. has joined the other two automakers in trying to protect the industry that employs over three million people.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

If the stimulus package is confirmed later today as expected, it could help encourage risk appetite further, which could see further gains for the kiwi dollar, Borkin said.

In New Zealand, the latest Roy Morgan confidence poll showed an showed consumer confidence rose 5.9 points to 105.6, the highest reading since September. The polling company said the election outcome stoked optimism in the outlook for the economy. Also helping lift sentiment, the central bank cut the official cash rate by a record 150 basis points to 5% last week.

(Businesswire.co.nz)

ENDS

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Top Scoops Headlines

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.