$NZ eases 1 cent against $US

Press, 13 November 1985, Page 49

$NZ eases 1 cent against $US

PA Wellington The foreign exchange market yesterday gave a bearish interpretation of the comments of the Prime Minister, Mr Lange, on interest rates, resulting in a much softer New Zealand dollar.

By late yesterday afternoon, the New Zealand dollar was at JU50.5715/35 — more than 1c (U.S.) down on its level late on Monday — after bottoming out at ?U50.5685. The trade-weighted Reserve Bank exchange rate index, which measures the New Zealand dollar against the currencies of the country’s main trading partners, closed sharply lower at 72.9, down from 73.3 at 1 p.m. and 74.2 at 9 a.m. The Prime Minister, said on Monday that the Government had to ensure that its borrowing needs did not “fuel” high interest rates. But Mr Lange, in a statement last night, said: “We will be constantly vigilant on the search for ways to improve our economic management, but there should be no doubt that we will maintain our direction.” A dealer said Mr Lange’s comments last night were “open to interpretation.”

“But I would be surprised to see a change in economic policy,” she said. Interest rates fell further yesterday, as did rates for , treasury bills in the ?200M tender. New Zealand’s interest rates — still among the highest of Western economies — have in the past helped underpin the kiwi dollar at high levels. Late yesterday afternoon the New Zealand dollar was worth 57.2 c U.S., 86.6 c Aust., 40.3 p, 117.6 yen and 1.5 marks. The Australian dollar took another hammering on the back of a worse-than-expected balance of payments deficit. The unit closed at ?U50.6590/10 after opening at ?U50.6672/82. Trading in the other currencies was quiet, ahead of tomorrow’s G-5 meeting of major democracies co-oper-ating to depress the United States dollar. The United States dollar closed at 2.6242/52 marks, against 2.6230/45 in the morning. In yen the dollar closed at 205.60/70 from 205.10/20. Sterling closed at SUSI.4IBO/90 from $U51.4195/10. In London the United States dollar eased against

all key currencies except the Italian lira in quiet European trading. The market’s sluggishness was attributed to Remembrance Day public holidays honouring servicemen and war dead in North America and several European countries.

In Tokyo, where trading ends as Europe’s business day begins, the dollar fell 1.90 yen to a closing 205.35 yen from 207.25 yen at Friday’s close. Later, in London, it was quoted at 205.78 yen. In London, the dollar fell against the pound. It cost ?U51.4195 to buy £l, more expensive than $1.4158 late on Friday. In New York, the United States dollar closed firmer in trading that was abbreviated by the Veterans’ Day partial holiday. It closed at 2.6240/60 marks, up slightly from Friday's finish of 2.6200/15. Meanwhile, the Canadian dollar fell amid continued speculation that recent bank failures in Canada would prompt the Bank of Canada to maintain an accommodative monetary policy, dealers said. The Canadian currency closed at $U51.3779/83, down from $U51.3760/63 on Friday.