New Zealand dollar slightly higher

Press, 10 September 1987, Page 23

New Zealand dollar slightly higher

PA Wellington The New Zealand dollar ended slightly higher after quiet range trading yesterday and it could strengthen again in the short term, dealers said. After opening at 5U50.6205/12, the kiwi drifted down to its low for the day of 0.6192/99. However, it spent most of the day above 62c and closed at 0.6218/25, after going as high as 0.6225/ 32.

Dealers said its downward correction on Tuesday was little more than a shake-out Its upside potential seemed greater now, they said. The kiwi was still being buoyed by a firming Australian dollar and a weak US dollar. In addition the market was filled with rumours of another EuroKlwi bond issue, dealers said.

"If a Euro-Kiwl issue eventuates in the next few days, the Kiwi will shoot up again,” one dealer said.

Cross rates for the New Zealand dollar were

AustBs.46c, 1.1167 marks, 37.54 pence, and 88.073 Swiss francs. The Reserve Bank trade weighted index moved to 70.3 from its 9 a.m. fix of 70.1. Persistent offshore buying pushed the Australian dollar higher to test SUSO.73 before easing on booksquaring and profittaking to 5U50.7280/85 at the close, dealers in Sydney said. This was ahead of Tuesday’s local finish of 0.7260/65 but in line with its London finish of 0.7285/90. The unit opened here at 0.7275/80.

"The Australian dollar is still being well bid and is likely to test SUSO.73 again,” said a trader with a U.S. banking house. However, he warned that the Reserve Bank might intervene at higher levels. The Reserve Bank of Australia was believed to have been a seller of Australian dollars In early London on Tuesday. But, according to dealers, was absent from the market yesterday.

They said the local dollar also continues to be buoyed by the negative tone on the U.S. dollar ahead of this week’s U.S. July trade figures. Despite Bank of Japan buying and comments from senior Japanese representatives to support the U.S. currency it continued to edge lower. In late trading it was 1.7920/ 25 marks and 141.15/25 yen from New York closes of 1.7945/55 and 141.55/65.

European central banks engaged in a concerted bout of dollar buying op Tuesday, but among economists there was doubt whether financial authorities could do more than smoothe a continued fall in the value of the currency.

A dollar nosedive could have unpredictable consequences for the worldwide economic expansion on which new jobs and higher living standards depend. But economists point to the continuing huge trade deficit run by the United States.