$NZ drops again

Press, 17 June 1986, Page 25

$NZ drops again

PA Wellington Market sentiment turned firmly against the New Zealand dollar after the unit was rigorously sold down on the foreign-exchange market in Wellington yesterday. • Falls on Thursday, Friday, and yesterday meant the unit has lost 3 U.S. cents in three days.

Dealers said the decline was caused by a continuation of last week’s bearish sentiment, which was sparked by lower domestic Interest rates. But the market was thin, as it was on Friday, so movements were exaggerated. The N.Z. dollar appeared to settle at $U50.5340/55 in late trading after plummeting 1.5 U.S. cents from Friday’s close to open in New Zealand at $U50.5315/30.

The kiwi dollar fell to a low of $U50.5295 in the early morning before staging a minor recovery.

One dealer said the market’s lack of depth was illustrated by a relatively small sell order of $6 million, which was enough to trigger a 30-point fall.

A medium order would be in the vicinity of SIOM to S2SM, he said.

“I’m not convinced that it’s going to collapse,” the dealer said, adding that there had been good corporate two-way business plus buying support out of Japan. “I wonder whether someone was caught long and dumped it.”

The New Zealand dollar was at a post-float low against the yen at 87.10, but dealers said this was merely incidental as only some importers would be affected. Another dealer said the kiwi dollar's downside potential would be tested before exporters would be drawn in to buy the currency. “I think they are looking for lower levels before coming back in to buy in any sort of volume.”

By 4.20 p.m. the New Zealand dollar was aworth 76.9 Australian cents, 1.17 Deutschmarks, 35.0 p, and 88.58 yen. The trade-weighted Reserve Bank index improved slightly to 63.9 from

63.3. The index was at 62.7 immediately before the dollar was floated. In the major currencies, the U.S. dollar was firmer at 2.2065/80 marks and 165.55/ 70 yen from 2.1985/95 and 165.10/20 this morning. Sterling was a touch weaker at $U51.5225/40 from 5U51.5250/00 while the Australian dollar gained some f round to finish at U50.6946/53 from $U50.6923/30. The Australian dollar firmed quietly in Sydney to a close of $U50.6960/67 from its opening 0.6930/37 on short covering from last week’s heavy selling and a softer United States dollar in Asia, dealers said.