Kiwi’s ½-hour leap

Press, 13 March 1986, Page 27

Kiwi’s ½-hour leap

PA Wellington The New Zealand dollar was firm and well-sup-ported in late trading on the foreign-exchange market in Wellington yesterday after a sharp USlc movement within the space of about 30 minutes early yesterday. Opening at 5U50.5245/ 60, the kiwi dollar broke through the psychological 0.5250 barrier to reach the day’s high of 0.5350 by about 8.15 a.m., settling to 0.5275/90 near the close.

One dealer said that although the unit had come off its high, the immediate outlook still looked bullish, partly because of the weaker U.S. dollar. People who had become accustomed to the unit hovering below the 0.5250 level were caught short of kiwi dollars, consequently overbuying to catch up once the unit began to rise.

The trade-weighted Reserve Bank exchange rate index was at 64.2 at 3 p.m., compared with 65.1 in the morning.

In America on Tuesday (early yesterday N.Z. time), the U.S. dollar closed lower after very sluggish activity all afternoon, unable to breach either end of a narrow trading range, dealers said. "There’s just no reason to buy it. The economy is just so-so, at best,” said one trader. “But nobody is sure it is safe to go short of dollars in a big way again.”

With no new economic data and no initiatives on the horizon from central bankers, dealers were reduced to following chart signals for positions. After failing to breach a key chart point at 2.28 marks, the dollar settled down to close at 2.2615/25 marks compared with 2.2775/ 90 on Monday.