N.Z. dollar hits post-float high of 0.4895

Press, 2 July 1985, Page 26

N.Z. dollar hits post-float high of 0.4895

PA Wellington The New Zealand dollar surged through the $U50.4850 barrier to strike a new post-float high of 5U50.4895 on the foreign exchange market yesterday.

Dealers said the New Zealand dollar’s continued strength had little to do with the softer United States dollar (which lost about three 3 pfennigs since its local close on Friday).

One said the unit was being “powered by its own strength.”

The reason for that was the level of overseas investment in high-yielding Government stock and EuroKiwi bond issues, for which people needed to buy local currency.

While there was good two-way business, trading was quiet. Dealers said that, as the Kiwi dollar continued to climb the market was be-

coming more and more nervous.

One said there was uncertainty as to whether the unit would go higher, while many were sure the unit

would break 0.49 in Europe overnight.

Another said the market was seeing some importers come in. Many were “hanging off” in buying their foreign currencies in the hope of striking a better deal. He said the New Zealand dollar needed more momentum from off-shore to give the currency “a good kick.” Otherwise it would stay at these levels early this week. Another dealer said the Kiwi’s strength had “no relation whatsoever” to the weaker United States dollar. He forecast the local unit would break SUSO.SO some time this week.

As proof of off-shore interest, the New Zealand dollar hit $U50.4890 in New York on Saturday (local time) — well above its close here on Friday. The unit’s low yesterday was $U50.4830.

The Reserve Bank indicative dollar exchange rate index exceeded its post-float level of 64.9 (set on March 6) to open at 65.6, rising to its high for the day, at 1 p.m., of 65.7 before settling back to 65.6 at 3 p.m.

The index, which was at 62.7 before the float, measures the New Zealand dollar against a basket of currencies of the country’s main trading partners. At 4 p.m. the New Zealand dollar was worth SUS4B7, sAusto.73o7, 121.1 yen, 37.2 p, and 1.47 marks. The unit has revalued itself by more than 3c United States since the Budget on June 13, when a lower-than-expected fiscal deficit was announced.

Since then, exporter demand and investment interest has taken the unit from $U50.4501/08 a day after the Budget, to $U50.4670/77 within a week of that, to a $U50.4840 closing level on Friday. The United States dollar closed softer at 3.0238/48, compared with its 3.0325/55 local opening and 3.0320/30 close in New York.

Sterling closed at $U51.3115/25, compared with its $U51.3065/85 local opening and $U51.3075/85 New York close. The yen closed at 248.25/35 against 248.35/55 and 248.45/55 respectively.

The Australian dollar finished at $U50.6680/90, unchanged from its opening, but firmer against its $U50.6665/75 previous close. In Tokyo, the United States dollar closed slightly easier because of growing perceptions of a sluggish United States economy following the less-than-ex-pected 0.7 per cent rise in the United States May leading indicators and a heavy United States trade deficit, dealers said. The United States dollar closed at 248.25 yen, against a 248.45/55 New York finish, and 3.0255/65 marks against 3.0320/30.