Kiwi trading quiet

Press, 16 July 1986, Page 33

Kiwi trading quiet

PA Wellington Trade in the New Zealand dollar was very quiet on a directionless foreign exchange market yesterday. The unit firmed slightly to 5U50.5330/45 near the close of trade, after opening at $U50.5315/30.

Dealers said there was no new economic data due to be released in the near future which would affect the kiwi.

The next large order would probably determine in which direction the unit would break out of Its present trading range. But there was increasing confidence about the durability of the kiwi, according to

one dealer. The exporter groups proposal to lower the dollar, through witholding tax and inflation-indexed bonds would have been unlikely to have a long-term effect, another, dealer said. The Minister of Finance, Mr Douglas, had rejected the proposal.

The broker said the immediate effect would be that the kiwi dollar would fall, as overseas Investors took their money out of the country, but that would push interest rates up again. Higher interest rates would once again be an attractive investment, and in time the overseas investors would come back in, he said.

The Australian dollar closed slightly easier in Sydney as market attention switched to the U.S. dollar, allowing the local unit to quietly consolidate.

The dollar closed at $U50.6425/30 after opening at the day’s highs of 5U50.6470/ 77. It drifted down on early import selling and late corporate booksquaring. Yesterday’s finish compared with Monday’s $U50.6425/32 close. Traders said the local dollar market was mostly quiet, particularly in the afternoon.

They said the market was already beginning to focus on next week's June quarter consumer price index figures.