NZ dollar rises as US trade deficit widens; Singapore holds fire

The New Zealand dollar rose after Singapore unexpectedly refrained from monetary stimulus and the US trade deficit in August widened as slower global growth reduced demand for exports.

The New Zealand dollar traded at 81.92 US cents at 5pm, up from 81.78 cents at 8am and 81.80 cents yesterday. The trade weighted index was little changed on 73.11 from 73.01.

Growth-linked currencies such as the New Zealand dollar rose after the Monetary Authority of Singapore left monetary policy unchanged even after its economy shrank 1.5 percent in the September quarter. US Commerce Department figures showed the trade deficit widened 4.1 percent to $44.2 billion from $42.5 billion in July.

"The initial spur came from the Singapore central bank," said Imre Speizer, market strategist at Westpac Banking Corp. "In a wider sense it was bullish for the Asian currencies with the kiwi and the Aussie responding."

"We got a second wind with the trade data around 2.15 this afternoon," Speizer said.

The kiwi fell to 63.35 euro cents from 63.55 cents on speculation indebted nation Spain will seek a bailout after its credit rating was downgraded to one level above junk by Standard & Poor's, spurring bets the region's debt crisis is easing.

"The market will force them to ask for a bailout if they don't," Speizer said. "If they do it soon it is a positive for the kiwi dollar."

There is no significant New Zealand data set for release until Tuesday when the consumer price index by Statistics New Zealand and Australia's full monetary policy statement are set for release.

The New Zealand dollar stayed under 80 Australian cents, rising to 79.76 cents from 79.53 cents yesterday at 5pm and increased to 64.23 yen from 63.83 yen. It was little changed on 51.12 British pence from 51.05 pence.

(BusinessDesk)


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NZ Market Snapshot

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NI225 17788.7 17808.5 17606.2 0.39%