$NZ closes firmer in moderate trade

Press, 24 April 1986, Page 26

$NZ closes firmer in moderate trade

PA Wellington The New Zealand dollar ended firmer after moderate trade on the foreign exchange market yesterday, up to 5U50.5705/20 compared with $U50.5675/90 in the morning. The unit traded as high as 5U50.5730 and as low as $U50.5670 during the day. Dealers said there was light importer business, while exporters entered the market later in the day. Overseas trade was mixed. The Government deficit figures, released in the morning, had little or no impact on the market as these were widely anticipated, they said. But the $1.8718 deficit was a good economic indicator and would help the kiwi hold present levels. The Reserve Bank trade-weighted index rose from 67.2 this morning to 67.5. On the cross rates yesterday one New Zealand dollar was worth Aust7Bc, 37.5 p, 96.5 yen and 1.25 marks. The US dollar weakened again to 168.00/10 yen near the close of trade compared with 168.90/05 yen in the morning. Dealers said trade in the US dollar was quiet and cautious because of possible intervention by the Bank of Japan. Against the mark the US dollar firmed marginally from 2.1850/65 marks this morning to 2.1855/70. The Australian dollar weakened slightly to $U50.7295/05 compared with a $U50.7309/16 opening in the morning, but dealers said it was well supported at current levels. Sterling eased to $U51.5160/75 near the close of trade against a SUS 1.5165/80 opening.

NZPA reports that the Tokyo foreign exchange market yesterday snipped another yen off the dollar, ignoring threats by the Japanese monetary authorities to intervene to stop the rapid fall of the U.S. currency. The dollar fell to a record low 166.80 yen soon after the market opened, but moved up to 168.05 at midday, after closing in New York at 168.95 yen. The Bank of Japan seemed to be sticking to a decision on Tuesday to keep out of the market after several days of fruitless and expensive attempts to stem the dollar’s fall. The Finance Minister, Mr Noboru Takeshita, with no action from his central bank and no immediate hope of help from Japan’s Group of Five partners, could tell parliament only that Japan would intervene to smooth any wild fluctuations. Dealers said only concerted action by the United States, Japan, West Germany, Britain and France could stop the dollar's slide towards 160 yen. But they said the remarks by the U.S. Treasury Secretary, Mr James Baker, to a Japanese newspaper ruled this out. Mr Baker told the Asahi Shimbun in Washington that the yen was rising in an orderly fashion and that the Bank of Japan’s thoughts on intervention may not at present correspond with United States views. The dollar also fell against other major currencies, dropping to 2.1810 West German marks from New York’s 2.19 before edging back to 2.1845 at midday. But the yen remained the front-runner, rising j against the mark to 76.96*

yen from 77.54 in Tokyo on Tuesday. Unable to halt the yen rise to protect Japanese industry from the worst effects of the very rapid currency movement, the Prime Minister, Mr Yasuhiro Nakasone and Mr Takeshita came under fire from the Cabinet. Ministers have criticised Nakasone and Takeshita for entering into a G-5 pact to depress the dollar which they could not now control. Nakasone asked them to bear up for the time being. The US dollar has fallen more than 30 per cent against the yen since the top five industrial countries agreed last September to try to reduce the dollar’s value when the dollar was quoted at 238 yen. Japan’s G-5 partners seem happy to let the yen drift higher against their currencies to cut Japan’s export performance even further and reduce their trade deficits with Tokyo. The Europeans, in particular, are calling for a greater yen rise, and European monetary officials have said a mark rate at about 75 yen would be acceptable. Japan believes 80 yen is the sensible level.