Kiwi at three-week high after Bernanke talks down QE tapering
The US economy still needs "highly accommodative monetary policy for the foreseeable future", the Fed chairman says.
The New Zealand dollar rose above 79 US cents for the first time in three weeks after US Federal Reserve chairman Ben Bernanke talked down the prospect of unwinding his money printing programme, sparking a sell-off in the greenback.
The kiwi climbed to 79.52 US cents at 5pm in Wellington from 77.96 cents at 8am and 78.51 cents yesterday. The trade-weighted index fell to 75.10 from 75.40.
The US economy still needs "highly accommodative monetary policy for the foreseeable future", Mr Bernanke said in a Q&A session after a speech in Cambridge, Massachusetts. That eroded expectations the Fed will start pulling back its $US85 billion monthly asset purchase programme as early as September.
The US dollar index, a measure of the greenback against a basket of currencies, dropped 1.8 percent to 82.50.
"They're talking about tapering, but that doesn't mean it's going to happen," says Tim Kelleher, head of institutional FX sales NZ at ASB Institutional NZ. "We could see some quite violent moves in the currency and we could see it back to 82/83 US cents."
The kiwi touched 12-month lows against the greenback earlier this month as traders started preparing for the Fed to start tapering its quantitative easing programme, and Mr Kelleher says it could retrace some of those losses for two or three months.
New Zealand's manufacturing sector continued to expand last month, though at a slower pace than its nine-year high in May, according to the BNZ-BusinessNZ performance of manufacturing index, while government figures showed food prices rose in June at their fastest pace since October 2010, the month when the government hiked GST to 15 percent from 12.5 percent.
The kiwi increased to 85.644 Australian cents from 85.49 cents yesterday and slid to 78.50 yen from 79 yen yesterday. It to 60.55 euro cents from 61.43 cents yesterday and declined to 52.48 British pence from 52.75 pence.
(BusinessDesk)
Paul McBeth
Thu, 11 Jul 2013
Thu, 11 Jul 2013
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Kiwi at three-week high after Bernanke talks down QE tapering
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