Rates stay on climb

Press, 30 July 1986, Page 43

Rates stay on climb

PA Wellington Money market interest rates continued to firm yesterday, ahead of tomorrow’s Budget and next week’s $5OO million stock tender. Secondary market rates are now 0.3 per cent ahead of those set at the July tender. Dealers said interest rates had firmed recently because of concern about the Budget and the deficit, the size of the next tender and the recent volatility of the foreign exchange market. Two specific factors had been the problems of the Minister of Finance in explaining his latest State spending cuts and Monday’s decision by the Australian Government to reverse its previous decision on withholding tax. Dealers said that while

New Zealand Government stock was becoming good buying at 17 per cent, the Australian decision would help draw attention to Australian bonds to the detriment of the New Zealand market. Government stock quotes yesterday were three years 17.1 per cent (16.9 per cent on Monday), five years 16.95 per cent (16.8 per cent) and 10 years 16.2 per cent (16.1 per cent). “Some overseas buying will be needed if the whole $5OO million is to be sold next week at under 17 per cent, but then 17 per cent is a good buy and good bidding might be forthcoming at that level,” one dealer said. Prime 90 -day commercial bills firmed to 16.95 per cent (16.8 per cent on Monday).