NZ dollar rises after govt's budget released
The New Zealand dollar rose after the budget was released and bond yields fell mostly because credit rating companies expressed comfort with the document while leaving ratings unchanged.
The government released a cautious election year budget that returned the operating balance to surplus a year earlier and predicted a reasonable but not spectacular economic growth.
Its bond tender programme reduced mostly because it has raised $5 billion more than it needed in the current financial year.
The NZ dollar rose to 79.36USc from 78.95USc before the budget was released and settled at 79.20USc at 5pm. It was at 78.83USc at 8am which was similar to its level at 5pm yesterday.
"The currency moved on the S&P comments after the budget," said Imre Speizer, a senior market strategist at Westpac. But the rating agency's comments on the possibility of a downgrade if the external position did not improve caused some caution when the market took time to ponder the full statement.
Mr Speizer expected offshore markets to also push the NZ dollar up in a knee-jerk reaction thought the risk of a rating downgrade remained.
ASB said the budget was not just about avoiding black marks from credit rating agencies.
"It is also about reducing New Zealand's collective vulnerability. The challenge of recovering from the recession has been compounded by the earthquakes, and the government's position reflects the knock backs. It will be a long time until the Crown accounts are as strong as they were in 2007," ASB said.
Bond yields fell as investors reacted to the containment of the fiscal blowout. Ten-year government bond yields fell about six basis points to 5.12%.
The NZ dollar was little changed at €0.5538 from €0.5536 euro at 8am and €0.5522 at 5pm yesterday. Against the aussie, it was at 74.26Ac at 5pm from 74.21Ac at 8am and 74.04Ac at 5pm yesterday.
It was at ¥64.57 from ¥63.97 yesterday.
The trade weighted index was 68.57 from 68.24 yesterday.
NZPA
Thu, 19 May 2011
Thu, 19 May 2011
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NZ dollar rises after govt's budget released
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