Kiwi sheds gains amid reports of North Korean nuke testing

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The New Zealand dollar shed gains in local trading amid fears seismic activity in North Korea may be the result of nuclear testing, a prospect likely to spook investors.

The kiwi fell to 83.45 US cents at 5pm in Wellington from 83.78 cents at 8am and up from 83.28 cents yesterday. The trade-weighted index rose to 76.01 from 75.54 yesterday.

The Australasian currencies dipped after media reports cited the US Geological Survey noting seismic disturbances near the sites of North Korea's two previous nuclear sites - areas with little or no history of earthquakes.

"Reports of nuclear testing in North Korea can often makes things happen," says Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "We don't know whether that's to blame, but nothing else has happened."

The kiwi gained against most currencies in Northern Hemisphere trading after a contender for Bank of Japan chief said he favoured more stimulus and Bundesbank chief Jens Weidmann scotched comments that the euro is overvalued.

The local currency jumped to 78.66 yen from 77.02 yen yesterday and was little changed at 62.32 euro cents from 62.27 cents.

Imre Speizer, market strategist at Westpac Banking in Auckland, says the New Zealand's dollars run against the greenback probably needs new upbeat economic news to break it out of its recent trading range.

"We need growth to start around the world to move up to the next level."

He says the kiwi has been trading on the cross-rates relative to the performance of the respective economies, rather than global sentiment that groups so-called risk-sensitive currencies together.

It gained to 81.45 Australian cents at 5pm in Wellington from 80.89 cents yesterday and rose to 53.34 British pence from 52.72 pence.

(BusinessDesk)


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