$NZ tops 65c as $US dips

Press, 2 December 1987, Page 39

$NZ tops 65c as $US dips

PA Wellington The New Zealand dollar broke through US6S cents in brisk trading in Wellington yesterday, puzzling dealers by its strength. It closed at U565.07/17C, after opening at U 565.00/ 10c. It traded down to U564.40C and as high as U565.21C, which dealers said marked a “major level of resistance.” Dealers said offshore support was bolstering the kiwi dollar and it looked as if it was going to trade higher, but they were not sure why. “It defies all fundamental analysis,” one said. “The sharemarket’s low, and interest rates are easing.”

Another described it as “just capital flows,” and said the Australian and New Zealand dollars could be benefiting from the weaker U.S. dollar. The Reserve Bank trade-weighted index closed at 65.8 against its open at 65.6 and Monday’s close at 65.7. Dealers said the U.S. dollar continued bearish

and predicted further falls.

In Sydney yesterday the Australian dollar closed at U570.58/63C, consolidating recent gains on a quiet trading day.

Dealers said the Australian dollar traded narrowly between U570.25c and 70.65, after opening a touch firmer at 70.50/55c from an overnight finish in New York of 70.51 c and Monday’s Sydney close of 70.47/52C. In Tokyo yesterday, the U.S. dollar steadied after falling to its lowest level against other major currencies for more than four decades, but dealers said they believed the currency would slide further with the currency market turmoil continuing and Wall Street down sharply on Monday. The dollar, which fell as far as 131.90 yen and 1.63.15 marks at one point in New York, moved up slightly to around 132.40 yen and 1.64 marks by 10.30 a.m. Tokyo time.

The dollar stabilised at 132.20/30, propped up by

intervention by the Bank of Japan. Tokyo currency dealers said the main factor driving the dollar down was still scepticism about whether the plan to cut the U.S. Budget deficit would be ratified by December 16. Some dealers said the United States appeared willing to let the dollar go lower and that central banks appeared to be half-hearted in their intervention to support the currency. In New York on Monday (early yesterday, N.Z. time), the U.S. dollar languished in domestic trading after being pounded to new lows in foreign-exchange markets overseas.

In the wake of big declines in Asia and Europe, the dollar traded lower against all major currencies except the Canadian dollar in late New York dealings.

A big advance in gold prices was ignited by the dollar’s fall, but the rally appeared to stall in U.S, trading as the dollar’s decline slowed. Republic National Bank of New York quoted fold bullion at a bid price of U 5490.25 a troy ounce at 4

p.m., up from SUS4B6 late Friday. Earlier in Europe, gold had been pushed as high as SUS 493 for the first time since February, 1983. Traders remained concerned about the ability of Congress to follow through on the deficit-cutting agreement reached with the White House. In addition, they said, the markets were pessimistic

about the prospects for another meeting of the industrialised Powers to discuss currency stabilisation. Traders also appeared convinced President Reagan’s Administration would permit the dollar to drift lower until a meeting of the Group of Seven industrial Powers was called.