Kiwi closes firm

Press, 19 February 1987, Page 24

Kiwi closes firm

PA Wellington The New Zealand dollar finished higher after a mixed and sporadically active session, dealers said.

The currency finished at $U50.5468/75 after trading between 0.5495 and 0.5445 during the session, against 0.5455/65 at the opening and 0.5440/47 at the close on Tuesday.

Dealers said market speculation of further New Zealand denominated bond issues in the United States pushed the unit higher in active early trading.

Dealers said $U50.5480 is a critical resistance level and the unit is supported around 0.5450.

Most dealers said easier short-term interest rates here are expected to be temporary and firm interest rates in the bond market will continue to attract support to the unit Wholesale cross rates for the New Zealand dollar were sAusto.B233, Dmk0.9954, 5tg0.3581, and Yen 83.909. The Reserve Bank

trade-weighted index closed at 65.1, up from 64.9 on Tuesday and 64.8 a week ago. The US dollar closed mixed at the end of lacklustre trading on Tuesday (early yesterday NZ time) as participants stepped to the sidelines to await Thursday’s congressional testimony by the chairman of the Federal Reserve, Paul Volcker, and the Secretary of the US. Treasury, James Baker.

Baker's press briefing on President Reagan's competitiveness initiative for the U.S. Economy had little effect on the dollar, because the briefing failed to provide new information on the Administration’s exchange rate stance.

The dollar closed at 1.8190/00 marks, up from 1.8165/75 at Friday's close.

“This was one of the quietest trading sessions in recent weeks,” said a dealer at a New York bank. “If people are wise they’re trying to stay out of trouble before Volcker and Baker testify on

Thursday.” This reluctance to trade aggressively before Volcker’s biannual Hum-phrey-Hawkins testimony to the Senate Banking Committee and Baker’s testimony to the Senate Finance Committee produced the day’s narrow trading ranges.

The dollar fluctuated between 1.8090 and 1.8210 marks, and between 152.95 and 153.45 yen. It closed at 153.35 yen, down slightly from Friday’s close of 153.60/70.

Dealers said that shortcovering in anticipation of Baker’s remarks had more impact on the dollar than the remarks themselves. He said he has not been talking down the value of the dollar but declined to speculate on an apropriate level. He also said the U.S. was continuing to work toward implementing the Tokyo summit accord.

“Baker didn't say anything to affect the dollar,” said James McGroarty, of Discount Corp. “He just reiterated that the U.S. is not trying to talk it lower.”