Kiwi dips slightly

Press, 3 July 1986, Page 28

Kiwi dips slightly

PA Wellington The New Zealand dollar drifted firmer to $U50.5430/ 45 in late trading on the Wellington foreign-exchange market yesterday. Although it was ahead of its $U50.5400/15 start, the kiwi dollar was below Tuesday’s $U50.5460/75 close. Dealers said trading was lacklustre during the day, ahead of the release of New Zealand’s balance-of-pay-ments details last evening (report, page 3). The kiwi dollar traded in a range from 54.05 to 54.35 U.S. cents after being sold down in Asia and Europe overnight to quotes of $U50.5380/95 on the back of a diving Australian dollar. Dealers said there was limited Asian buying at the kiwi dollar’s lower levels. It drifted up on exporter covering and profit-taking from short positions established when the currency was higher. On the cross-rates late in the day, the kiwi had risen to 82.59 Australian cents and was also worth 1.192 Deutsch marks, 35.32 p, 89.12 yen, and 0.972 Swiss francs. The Reserve Bank's indicative exchange rate index finished at 65.8, up slightly from 65.7 at 9 a.m., but down from 66.0 on Tuesday. In Sydney last evening the Australian dollar closed lower

at $U50.6545/52 after a day in which the currency fell to a new record low on the Reserve Bank’s trade weighted index. The currency had opened at 5U50.6573/80 after Tuesday’s 5U50.6620/30 close. In post-close business, the Australian dollar dropped to a day’s low of 5U50.6505 after a late import sale of about sAust3soM. The low came in nervous trading after Tuesday’s Government announcement of a tightening of regulations on withholding tax. The Australian dollar fell to a record low on the Reserve Bank’s index to 54.9 points from its previous record 55.2 low on Tuesday. Dealers said most commercial trading was from importers and interbank traders. A senior market analyst and economist with Bank of America Australia, Ltd, Mr Jon Craig, described the heavy selling of the dollar as a "tragedy.” The Australian dollar fell to new lows on other currencies and in the absence of new Eurodollar raisings in the short term, would remain vulnerable, dealers said. In new closing lows on major currencies, the dollar moved to 1.4368 Deutschmarks from 1.4477, 107.29 yen from 108.15, £0.4262 from £0.4298, JNZI.2OBO from $NZ1.2156 and 1.1705

Swiss francs from 1.1802. In Europe overnight, the U.S. dollar had tumbled to a seven-week low against the West German mark bn foreign-exchange markets after further news of a sluggish performance by the American economy. The U.S. dollar, which opened in Frankfurt at 2.1860 Deutschmarks, fell as low as 2.1760 marks after the release of a weaker than expected 0.2 per cent rise in U.S. May leading indicators. Foreign-exchange dealers said the market had expected the leading indicators to rise between 0.5 and 0.6 per cent. In April, they rose 1.3 per cent. The U.S. dollar has lost 30 per cent in value since last September, and at its current low levels many dealers fear West Germany’s central bank, the Bundesbank, may enter the open market to stop the fall. In Paris, the dollar fell below seven French francs to be fixed at 6.97 francs, its lowest level for seven weeks. But dealers did not detect any Bank of France intervention to support the American unit. In London, sterling benefited from the weakness of the American currency, rising to a late $U51.5470, compared with 5U51.5325 at Monday’s European close.