Kiwi approaches US70c

Press, 24 May 1988, Page 23

Kiwi approaches US70c

PA Wellington The New Zealand dollar hit a five year high yesterday and dealers expected it to break through US7Oc today. The kiwi traded as high as U569.80c in quiet trade before closing at U569.63/72C. It opened at U569.26/35C and closed last week at U 569.21/ 28c.

Dealers said U569.80C was the highest it had been since March 7, 1983, when it was devalued from U571.45c to U565.50C.

The kiwi was bolstered by a bullish Australian dollar which was boosted to a new three year high of U 578.75/ 70c at midsession in Sydney.

They said slightly firmer interest rates were attracting overseas investors and New York investment banks were still willing to buy the N.Z. dollar.

A Wellington dealer said market operators had predicted in January that the N.Z. dollar would break US7Oc but the currency’s sometimes hesitant behaviour since then had made some dealers "sceptical” about the prospect. He warned that a rise in the key U.S. 30-year treasury bonds to 9.36 per cent could trigger slides offshore. On May 11 the Dow Jones dropped 38 points after some major U.S. banks lifted their

prime lending rates by 0.5 per cent to 9 per cent. “We suggest the (New Zealand) market is setting itself up for a major correction later this week,” he said. “And the catalyst will be the Dow Jones industrial index. If it comes under pressure it will be bad news for the Australian and New Zealand sharemarkets as people pull their money out of here.” On the cross rates, the kiwi was worth AustBB.47c, 1.1862 marks, 37.32 p, 86.969 yen and 0.9882 Swiss francs.

The Reserve Bank trade weighted index closed the day at 67.3, against its open at 67.1. Its closing fix on Friday was also 67.1.