NZ dollar gains to 8-month high vs Aussie
By Jonathan Underhill
March 26 (BusinessDesk) - The New Zealand dollar rose to an eight-month high against the Aussie dollar and climbed against the greenback as iron ore prices continued to slide amid fears of a trade war sparked by US tariffs on steel and aluminium.
The kiwi dollar rose to 94.12 Australian cents as at 5pm in Wellington from 93.70 cents on Friday in New York. The kiwi rose to 72.73 US cents from 72.33 cents in New York while the trade-weighted index climbed to 74.64 from 74.33.
Iron ore prices have fallen to four-month lows, denting the Aussie as the currency of a major exporter, while dairy product futures have been relatively more resilient. The kiwi has also been assisted by upbeat comments from Reserve Bank governor-designate Adrian Orr, who said at a briefing for the new policy targets agreement that he was "very, very pleased with the economic state of New Zealand over recent years." The US dollar index sank to its lowest level in about a month.
"Adrian Orr said the economy is in a pretty healthy state," said Martin Rudings, a senior dealer at OMF. "That always works for people who are looking for something to buy."
By contrast, "there's too much global steel and iron ore just keeps getting sold. China has a lot of stockpiles," he said. Ultimately, "trade tariffs will slow global growth" and that has weighed on the kiwi, and left some investors "a little bit short kiwi."
Figures today showed New Zealand recorded a trade surplus of $217 million in February compared to a $42 million deficit in February last year. Goods exports jumped 11 percent, outpacing a 4.6 percent gain for imports. Milk powder, butter, and cheese shipments kept dairy products as the country's largest commodity export, with that category up 5.3 percent to $1.095 billion.
Earlier, Orr and Finance Minister Grant Robertson held a joint briefing to announce the expanded PTA and proposed changes to the Reserve Bank Act that will put policy decisions in the hands of a committee.
The kiwi dollar rose to 51.33 British pence from 51.14 pence in New York on Friday and gained to 58.77 euro cents from 58.56 cents. It rose to 4.5909 yuan from 4.5654 yuan and gained to 76.29 yen from 75.76 yen.
New Zealand's two-year swap rate rose 1 basis point to 2.23 percent and the 10-year swap rate rose 2 basis points to 3.12 percent.