Dollar closes at 0.52

Press, 25 July 1985, Page 22

Dollar closes at 0.52

PA Wellington The New Zealand dollar, acting independently from a weaker United States dollar, rallied strongly on offshore investment to close on the foreign exchange market yesterday more than 1.5 c (U.S.) above its opening level. Dealers said the Kiwi dollar seemed to be defying gravity when it shot up in two major rallies, breaking another post-devaluation record to close at $U50.5285/ 95.

In a last minute rally that went into the early evening, the New Zealand dollar briefly broached SUSO.S3 to reach $U50.5305/15. Dealers said the major gains were fuelled almost entirely by overseas interest in Euro Kiwi bond issues out of London and Frankfurt.

The main casualty was the Australian dollar, against which the New Zealand unit had firmed by more than 2.5 c (Aust.) in the last three days. Strong support for the kiwi dollar took it up to $U50.5160 in London overnight. One or two sellers took it down to open in New Zealand at $U50.5145/55 but the slack was quickly taken up, dealers said.

They said the ongoing strength of the New Zealand dollar bore no relation to the weak United States dollar, which hardly moved at all from 2.87 marks during the day. Dealers said that high interest rates attracting offshore interest far outweighed all other factors behind the rising trend. “They (overseas investors) see that investing in the Kiwi is a good capital gain,” one dealer said.

They stood to gain twice by reaping the benefits of high interest rates and an appreciating currency. One broker said the comments in the latest OECD report on New Zealand went down well but people were not taking into account the fundamentals such as the latest high Consumers Price Index figure.