Kiwi makes sharp jump

Press, 23 October 1986, Page 22

Kiwi makes sharp jump

PA Wellington Early buying pressure out of New York was rumoured to be the reason behind the New Zealand dollar’s sharp USO.6c jump in active trading on the foreign exchange market in Wellington yesterday. Opening at 5U50.5005/ 15 the domestic unit was bid up to a high of 5U50.5065, settling back down to 5U50.5038/48 near the close of business. Over all the outlook was confused, dealers said. While the New Zealand dollar had risen to a new support level of 5U50.5030 there still lacked the fundamentals to justify bullishness. “Some people are calling for a higher kiwi in anticipation firming interest rates before the

end of the year ... but that is not materialising,” one dealer said.

“The market is being stifled by its own bullishness, without the concrete evidence to support such a view,” he said. The kiwi had nevertheless ratcheted itself into a new range. “Because kiwi has varied so much over the last few weeks, it’s difficult to see it following a set pattern,” another dealer said.

The trade-weighted Reserve Bank exchange rate index finished at 62.0, down from 62.1 in the morning.

The New Zealand dollar reached parity with the West German Deutschemark, the closing cross rate being 1.0029 DM.

Other wholesale rates for the kiwi were

Aust7B.3c, 35.2 p, 78.32 yen and 0.82 Swiss francs.

The Australian dollar finished at 5U50.6378/85 from 0.6370/77 in the morning. In the major currencies, the U.S. dollar closed a touch firmer at 1.9857/67 DM from 1.9835/45. In yen the U.S. dollar was at 155.05/15 against 154.07/ 17.

Sterling was barely changed at 5U51.4338/48. In Sydney, the Australian dollar closed firmer at 5U50.6375/82 after again trading quietly in a narrow range throughout the day, dealers said. The currency opened easier at $U50.6363/65 from Tuesday’s 5U50.6370/77 close and traded in a narrow band between 5U50.6365 and 0.6386

The Australian dollar

was mostly firmer on the cross rates at 1.2670 DM from 1.2664, 98.98 yen from 98.55, 1.0395 Swiss francs from 1.0382 and 44.50 p from 44.40. In New York, the American dollar, which rose earlier in Europe, retreated against other major currencies in the United States on Tuesday (early yesterday N.Z. time) as interest rates softened.

In New York, sterling fetched 5U51.4332 compared with 5U51.4320. Other dollar rates in New York were 1.98331 DM, down from 1.9865; 155.095 yen, up from 154.75; 1.6280 Swiss francs, up from 1.6275; 1.39045 Canadian dollars, down from 1.39205; 6.4980 French francs, down from 6.5070; and 1373.50 Italian lire, down from 1375.00.