Shaky kiwi falls 0.75 U.S. cents

Press, 30 August 1986, Page 23

Shaky kiwi falls 0.75 U.S. cents

PA Wellington A large sell order pushed the New Zealand dollar down to 5U50.4857/ 67 near the close of trade from its 5U50.4933/43 opening on the foreign exchange market in Wellington yesterday.

Dealers said the unit struck selling pressure when it opened below $U50.4950 in the morning, and a single corporate order of about SBOM to SIOOM knocked it down to 5U50.4865. A lack of buyers rather than any panic selling was responsible for the fall, one dealer said. Because there was limited exporter buying coming up to support the kiwi, most dealers said they expected it to remain at present levels or fall further in the near future. Movements in the Australian and American dollars would have the most immediate effect of the kiwi dollar, one dealer said. “If it breaks below 5U50.4850 then we could reach 47c,” the dealer said.

The Reserve Bank trade weighted index stood at 60.4 at 3 p.m. compared with 61.3 at 9 a.m.

Sterling also weakened gently to 5U51.4765/75 from its 8U51.4775/85 opening. The U.S. dollar was barely moved at 155.90/00 yen and 2.0525/35 Deutsche marks near the close of trade.

The value of the New Zealand dollar (BNZ rates) yesterday morning, compared with its value before it was floated in March last year, was: Mar 1 Aug 25 1985 1986 JUS 44c 48.8 c Sterling 41.15 p 33.0 p Canada 61.2 c 68.2 France 4.49ffr 3.27ffr H.K. $3.43 $3.80 Japan 114 yen 76yen N’lands 1.66 g 1.13 g S’pore 99c $1.05 Switz I.26sfr o.Blsfr W.Germ. 1.47DM I.OODM Austrl 62.4 c 80.4 c

In Sydney the Australian dollar ended the week on a steady note in thin trading. It closed at $U50.6090/97, unchanged from Thursday, after opening at $U50.6085/ 92.

Dealers said Reserve Bank willingness to provide support early in the week at the $U50.6050 levels effectively kept interbank sellers at bay. This combined with high domestic interest rates to reduce downward pressure on the currency. But nervousness over the release of Moody’s Investor Services review of Australia AAA credit rating limited Australian dollar gains. The Australian dollar traded narrowly over a $U50.6070 to SUSO.6IIO range on the day. On the week the range was $U50.6113 to $U50.6030 compared with a forecast of $U50.5950 to $U50.6150. A U.S. banking house trader said the dollar could firm early next week because of the high local interest rates. A chartist said the dollar was moving up, but would be limited to US63c.

The dollar finished higher at 1.2513DM from 1.2452,

94.95 yen from 94.29, £0.4125 from £0.4109, and 1.0021 Swiss francs from 1.0007. The Reserve Bank index was lifted to 50.3 from 50.1 Thursday.

In New York on Thursday (early yesterday N.Z. time), the U.S. dollar closed with moderate gains against most major currencies as dealers evened positions before the Labour Day week-end and month’s end.

However, the gains were tempered by continuing pessimism about the health of the U.S. economy, they added. “Everyone is alarmed by how weak the economy is despite the stimulus it has received recently,” said one dealer. The dollar rose to 2.0520/ 30 Deutsche marks from 2.0450/60DM at Wednesday’s finish. The U.S. currency also climbed to 156.05/15 yen from 154.70/80 and to 1.6540/ 60 Swiss francs from 1.6440/ 55.

The position-squaring was largely by corporate customers, who needed to balance their books before August ended, dealers said.

The U.S. dollar was also briefly aided by a Chicagobased rumour that the Bundesbank (West Germany’s central bank) which had only just decided not to alter policy at a regular meeting, had called an extraordinary meeting. An official denial by the Bundesbank was issued. The market took notice of remarks by Dr Henry Kaufman, chief economist at Salomon Bros.

He said in a speech to be delivered in Wyoming that the Federal Reserve Board must continue to lean towards an easier monetary policy, even at the risk of rekindling inflation, in order to avoid an economic disruption of major proportions.