$NZ rallies after tumble

Press, 23 March 1988, Page 35

$NZ rallies after tumble

PA ! Wellington The : New Zealand dollar rallied:: in the afternooh session yesterday to close near its opening level after diving in early trade to its lowest for more' than two weeks. The kiwi dollar closed at U566.37/44c against its open of 66.33/40c and Monday’s close of 66.58/ 65c. It ranged between U565.90C and 66.50 c." ||[' For the first time this year the cross rate with the Australian dollar moved below Aust9oc. [ It has been as high as Aust94c several times this year.- ■ I In the brisk morning session' large off-shore selling orders took: tlie kiwi dollar down to its day's low of U565.90C. [[: The Reserve Bank’s announcement that it' was apjusting the daily cash balance target from: $4O million to $3O million sent interest rates and the kiUri dollar : back up, dealers said. [' - : | [•"

On the cross {rates the kiwi: dollar was {worth AustB9.96c, 1.1200 deutsrih marks, 36.20 p, 84.378 yen and [0.9260 Swiss) francs j The Reserve Badk trade weighted index rose to 65.8 c at 3 p.rn; from its 9 a.m. fix of 6£>.6c. | Meanwhile, in Sydney cautiously bullish sen imerit saw the Australian dollar trade quietly to a firmer close. [[ [ The unit finished near its high for the day at U57[3.86/91c from Monday evening’s local ! close at 73.68/73C and {yesterday morning’s opening at 73.7.-5/80C. 11 j The U.S. dollar started lower but firmed on Bank of Japan buying' to close in {Sydney at 11126.95/05 yen! and 1.6857/67 dhi frorii the close! in Nqw York at 126.95/127.05 aijd lt in Sydney on Monday pt 127 20/30 and 1.6868/78[| Local dealers j said the U.S! unit could be further bought by Japanese ins itutions, especially life in-

surance : companies, to avoid making book losses before March 31, the end of the Japanese fiscal year.: [: -, | i||' . I Lp 1 Meanwhile, | the Australian currency was weirbid locally [with | continuing offshore demand for Australian dollar iEuroborid issues, dealers said., | i They said , ft was likely to. test U574.00c in tlie immediate future. [ ■ : In New York on Monday (early yesterday N.Z. time) the dollar finished lower in quiet trading, yvhiie speculative demand catapulted the 'yen to its highest levels' against the mark in about 19 months. | There were [a number of theories for the yen’s strength, chief among them was the [view that Japan’s ! economy was robust and that; once that country’s fiscal \ year closes on [March 31, Japanese operators will have few qualms about selling dollars.. |: I “It seems I as though everyone expects Japan to

dollars after the fiscal year ends,” [said Charles Spence of First Interstate Bank in Los [Angeles! : The dollar ended at 126.95/05 yen, down about one yen from 127.90/(00 at Friday’s close. : | The dollar! also closed iat 1.6888/98] dm, down from 1.6945/55 at the end : of last week. {But the West German currency ’sank to [ 75.02 yen at [one stage —. its poorest showing since August 22, 1986 — before ending at 75.18 yen versus 75.49 on Friday. : Traders { were well aware of the likelihood that Japanese life insurers ;may be tempted to buy dollars before fiscal yearend to avoid having to write-off losses of some 2000 billion yen on dollardenominated securities holdings. [ [ Under Japanese tax laws, they would’ have to do that if the dollar average for March drops below 126.84 :lyen,| dealers said?’ . I I • I