Kiwi rises as GDP springs a surprise
BUSINESSDESK: The New Zealand dollar gained and is edging back toward 83 US cents after figures showed the local economy grew at a faster-than-expected pace in the second quarter, driven by record milk production and increased building activity.
Gross domestic product grew 0.6% in the three months ended June 30, from a revised 1% pace in the first three months of the year, Statistics New Zealand says. Growth of 0.3% had been expected in the second quarter, according to a Reuters survey.
The kiwi rose as high as 82.98 US cents and was recently at 82.95 cents, from 82.49 US cents immediately before the statement. The trade-weighted index rose to 73.46 from 73.07.
The second quarter figures reflect a boom season for pasture growth that resulted in record production of milk, the basis of New Zealand's exports of dairy products.
Added to that, the reconstruction of earthquake-damaged Christchurch is starting to stoke building activity.
"Certainty, there is some evidence of the Christchurch rebuild coming through earlier than expected – it is better than the market expected," says Tim Kelleher, head of institutional FX sales NZ ASB Institutional, told BusinessDesk. "The kiwi and Aussie should keep edging up."
The New Zealand dollar could go as high as 83.50 US cents overnight, Mr Kelleher says.