Dollar steadies after sell-off

Press, 18 December 1985, Page 37

Dollar steadies after sell-off

PA Wellington Some stability returned to foreign exchange market trading in the New Zealand dollar yesterday after Monday’s big sell-off. Dealers said the dollar traded most of the day between US49c and U549.5c. The kiwi closed at $U50.4915/30 yesterday, about USlc ahead of its 0.4820/50 opening. . Dealers said the market was steady as many players sat on the sidelines to reassess the kiwi’s direction after its 15 per cent devaluation in four days and to see how it fared in European trading last night (N.Z. time). But some exporters took advantage of the weaker kiwi and the best cross rates (against currencies other than the U.S. dollar) for a long time. Dealers said the kiwi seemed well supported at yesterday’s levels, with no major sellers, and found a resistance level at around US4B.BC.

While some predicted further downside potential for the currency, others believed it would now return above US5Oc. “With the United States dollar in such despair and the Aussie dollar still weak, people can’t all go into yen and deutschemarks.” said one trading bank dealer. “They may look at exotic currencies and see the kiwi now at bargain basement prices.” After Monday’s US3c fall in the kiwi on the local market, it took another hammering in London overnight, with heavy selling by European banks pushing the unit as far as U547.9c before finding support. It closed in London around its opening level in New Zealand yesterday morning. The Reserve Bank’s trade-weighted exchange rate index firmed to 62.1 at 3 p.m. from 61.9 at 9 a.m. and 61.0 on Monday, but was still below its 62.7 level before the March float of the New Zealand dollar. New Zealand dollar values

late yesterday, with their prefloat‘values in brackets, were: U549.3C (US44c), Aust72.4c (Aust62.4c), 123 marks (1.47 marks), 34 p (41.4 p and 99.3 yen (114 yen). , Dealers said trading in other currencies was quiet yesterday ahead of the Christmas holi?he United States dollar closed weaker, on predictions of further United States interest rates declines, at 2.5055/ 70 marks and 201.70/85 yen. Despite its recent fall, the New Zealand dollar has, since floating on March 4 appreciated against most Asian and Pacific currencies.

The following table shows the value of the New Zealand dollar immediately before the float and again yesterday. Mar 1 Dec 16

The figures are public selling rates quoted by the Bank of New Zealand.

U.S. 44C 48.5c Sterling 41.15p 33.6p Canada 61.2c 67.9c France 4.49fr 3.72fr HJC. 53.43 53.78 .Japan U4yen 98yen Nethlnds 1.66g 1.37g S’pore 99c 51.02 Switz. 1.26fr 1.02fr Germany 1.47dm 1.22dm Aust. 62.4c 71.4c