Kiwi above 86 cents as economic prospects, high yields drive demand
The trade-weighted index climbs to 79.36 from 79.11 – its highest level ever.
The New Zealand dollar continued its rally, topping 86 US cents and charting a new record on a trade-weighted basis as the nation's economic fundamentals and demand for high yields in a low-rate world drove demand.
The kiwi rose to 86.32 US cents from 85.92 cents at 5pm in Wellington yesterday. The trade-weighted index climbed to 79.36 from 79.11.
Stocks on Wall Street have set new record highs, keeping intact global risk-on sentiment and demand for the currency of a central bank whose key interest rate is as much as 250 basis points higher than the Federal Reserve's.
New Zealand's outlook for economic growth stands out in the face of a contracting eurozone and stumbles in the US.
"Offshore speculative and leveraged players continue to show appetite for the higher yield and positive economic story of the NZD," Mike Jones, strategist at Bank of New Zealand, says in his morning note.
Underlining the appeal of the nation's yields, investors bid $2.8 billion for $2 billion of 2020 government bonds that went on sale this week, he says.
The kiwi rose to 81.84 Australian cents from 81.66 cents and climbed to 86.18 yen from 85.58 yen. It edged up to 65.87 euro cents from 65.79 cents and rose to 56.10 British pence from 56.05 pence.
(BusinessDesk)
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Kiwi above 86 cents as economic prospects, high yields drive demand
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