NZ dollar rises to six-year high vs yen as NZ looks to raise rates while Japan continues stimulus

The New Zealand dollar hit a six-year high against the yen this morning and may trend higher this year reflecting the divergent paths of the nations' central banks.

The kiwi touched 86.90 yen this morning, the highest level since February 2008, and was trading at 86.85 yen at 8am in Wellington, from 85.67 yen at 5pm on Friday. The local currency advanced to 82.81 US cents, from 82.72 cents at the New York close and 82.16 cents in Wellington Friday.

The New Zealand dollar has rallied 18 percent against the yen the past year as New Zealand's Reserve Bank moves to tighten interest rates to cool a reviving local economy while the Bank of Japan has pledged to keep interest rates low and eyes the prospect of further stimulus to boost inflation.

"The anticipation of pending rate rises, whether it comes in January or March, is adding to the strength of the kiwi dollar," said Stuart Ive, senior adviser at OMF. "The yen is weakening. They are stimulating their economy and will continue to do so for at least the next year and a half.

"It's the tale of two cities between the central banks, we have one that has clearly signalled they intend to raise rates in the near future whilst on the Japanese front they have no intention to do such a thing."

OMF's Ive said the kiwi is likely to move higher against the yen this year and will likely make an attempt on its post-float high of 97.81 yen reached in July 2007.

Today, traders will be eyeing an HSBC/Markit Services PMI report for December, scheduled for release at 2:45pm New Zealand time.

The New Zealand dollar rose to 92.40 Australian cents from 91.81 cents in Wellington Friday, advanced to 60.92 euro cents from 60.16 cents and gained to 50.47 British pence from 49.99 pence. The trade-weighted index increased to 78.39 from 77.65 on Friday.

(BusinessDesk)

This article is tagged with the following keywords. Find out more about My Tags

Comment & Question

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7889 0.0013 0.17%
AUD 0.9199 -0.0030 -0.33%
EUR 0.6326 0.0028 0.44%
GBP 0.5005 0.0017 0.34%
HKD 6.1171 0.0115 0.19%
JPY 92.7120 0.0650 0.07%

Commods

Commodity Price Change Time
Gold Index 1196.6 -0.500 2014-11-26T00:
Oil Brent 79.4 -0.640 2014-11-26T00:
Oil Nymex 73.7 -0.400 2014-11-26T00:
Silver Index 16.6 0.000 2014-11-26T00:

Indices

Symbol Open High Last %
NZX 50 5457.4 5462.1 5457.4 -0.04%
NASDAQ 4760.2 4788.0 4758.3 0.61%
DAX 9934.8 9992.7 9915.6 0.63%
DJI 17812.2 17833.8 17814.9 0.07%
FTSE 6729.2 6749.9 6729.2 0.03%
HKSE 24169.8 24228.1 24112.0 -0.45%
NI225 17310.5 17346.8 17383.6 -0.78%