(BusinessDesk) The New Zealand dollar gained in local trading on optimism US politicians will be able to set aside partisan differences and cut a deal on the US$600 billion in Federal tax increases and spending reductions with a vote set for Sunday.
The kiwi rose to 82.11 US cents at 5pm in Wellington from 81.83 cents at 8.30am and 81.89 cents yesterday. The trade-weighted index rose to 73.76 from 73.53 yesterday.
The US House of Representatives will hold a session on Sunday in a last ditch effort to avert the fiscal cliff, which comes into effect on Jan. 1. Congress majority leader and Republican Eric Cantor announced the vote on Twitter after Senate majority leader and Democrat Harry Reid said a deal was looking unlikely. Politicians don't have to reach a compromise before the New Year and can amend legislation after it kicks in, though similar stalling tactics on the debt-ceiling debate last year saw Standard & Poor's downgrade America's credit rating.
"There's a growing risk one of the credit agencies will downgrade them regardless," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland. The kiwi had "quite a strong rally and bounced off its low on the back of the supposed meeting of the politicians."
Kelleher said the kiwi is finding buyers at 81.50 US cents and sellers at 82.50 cents.
The kiwi extended gains against the yen and is headed for a 2.2 percent weekly gain against Japan's currency as investors prepare for the new Shinzo Abe-led government to take a more active role in the economy. The currency rose to 70.92 yen from 70.30 yen yesterday.
The kiwi was little changed at 79.09 Australian cents from 79.07 cents yesterday, and traded at 61.99 euro cents from 61.93 cents. The local currency increased to 50.96 British pence from 50.80 pence yesterday.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- My Food Bag seeks investors after 'a number' of offers
- Tegel chairman praises private equity owner after solid NZX listing
- FMA defends formal warning over prosecution in anti-money laundering breach
- Windfarms investors set up showdown with Vector
- Patent law changes: government rush to please Aussies will hurt NZ business
Most listened to
- My Food Bag co-chief executive Cecilia Robinson discusses what its capital restructure might be made of
- Anthony Harper partner Jennifer Mills on the question: Uber drivers - contractors or employees?
- The government has backed itself into a corner into over how patent attorneys are regulated, says Rob Hosking
- In his Editor’s Insight, Nevil Gibson says the Australian Budget is a curtain-raiser for an election
- What's behind ASB's forecast of GDP growth at 4%? NBR's Jason Walls talks to ASB chief economist Nick Tuffley to find out