Kiwi, $Aust calm down

Press, 30 July 1986, Page 39

Kiwi, $Aust calm down

PA Wellington A less volatile Australian dollar helped stabilise the New Zealand dollar at US53c on the foreign exchange market in Wellington yesterday. Trading was quiet after Monday’s hectic activity, but the market, especially in Australian dollars, was edgy.

With the Australian dollar trading at 95 yen on the cross-rate, the unit was in no man’s land.

Dealers said exporters had “missed the boat” when the New Zealand dollar sank in sympathy with the Australian, as the unit now appeared to be in a 0.5280 to 0.5330 range.

Both Australian and New Zealand dollars were given a brief reprieve overnight because of a sharply weaker U.S. dollar.

The U.S. unit fell by nearly 4 pfennigs from Monday’s close to open at 2.1120/35 marks and by more than 9 yen to 146.80/00. Near the close the greenback'was unchanged against the mark and slightly firmer against the yen at 155.50/60.

This turn of events helped lift the Australian dollar off its record low against the U.S. dollar of U557.15C. Other factors to aid the Australian unit were the

announcement by the Federal Treasurer, Mr Paul Keating,, of proposals for the liberalisation of foreign investment guidelines and the reinstatement of a withholding tax exemption on some securities.

One dealer said that, while the market was assimilating these measures, further selling out of Asia was expected because there were no fresh factors to encourage people to buy back Australian. The three points still weighing against the Australian unit were the state of the labour market, problems within the Australian Labour Party and the impending release of Australia’s international credit rating.

People would not be prepared to invest in Australia if the rating fell - to double A status, the dealer said. The Australian dollar opened at SUSO.6IIB/28 and closed slightly weaker at SUSO.6OBO/90.

The kiwi unit near close was marginally higher at $U50.5270/80 from $U50.5255/70 in the morning. It briefly rallied to $U50.5330.

On the cross-rate, the New Zealand dollar was still high against the Australian, closing at AustB6.6oc compared with its record high of 89.3 set on Monday.