NZ dollar hits eight-month high against yen
The New Zealand dollar rose to an eight-month high against the yen as New Zealand heads into a period of higher interest rates while Japan eyes further stimulus to boost its economy.
The kiwi rose as high as 86.37 yen early this morning and was trading at 86.23 yen at 8am in Wellington from 85.61 yen at 5pm yesterday. The local currency advanced to 82.06 US cents from 81.36 cents yesterday.
The New Zealand dollar has advanced 20 percent against the yen this year as a revival in New Zealand's economy moved the nation's central bank into a tightening bias while the Bank of Japan has pledged to keep interest rates low and eyes the prospect of further stimulus, known as quantitative easing, to boost growth.
"The Bank of Japan has made it pretty clear, they have pledged to keep rates down and they are prepared to increase the QE," said Mark Johnson, senior adviser at OMF. "Central banks are quite polarised here with the RBNZ is likely to hike rates."
The next target for the kiwi of 89 yen is achievable over the next few months, Johnson said. "Yen weakness will remain a dominant theme and I think the kiwi will outperform."
The New Zealand dollar advanced to 59.45 euro cents from 59.17 cents yesterday and rose to 49.69 British pence from 49.26 pence.
The kiwi increased to 92 Australian cents from 91.82 cents yesterday. The trade-weighted index advanced to 77.45 from 77.01 yesterday.