Kiwi leaps 1c: post-float high
PA Wellington The New Zealand dollar leaped more than one United States cent in active trading to yet another post-float high in Wellington yesterday. It reached U570.50c before closing at 70.30/40c.
The kiwi opened at U569.38/45c after closing on Tuesday at 69.27/37c. The previous post-float high of U570.20C was set last month. The kiwi has risen 58.6% from its float at U544.44C in March, 1985, but only 9.4% on the Reserve' Bank’s trade weighted index. The trade-weighted index closed yesterday at 67.7 against its open of 67.0 and its close on Tuesday of 66.8. The leap against the United States dollar yesterday was caused by the sharp rise of the Australian dollar, and the first New Zealand quarterly current account surplus in seven years, dealers said; The March quarter bal-ance-of-payments figures, announced yesterday showed a SIO2M surplus compared with an SB42M deficit in the December quarter. On the cross-rates, the New Zealand dollar was worth 86.53 Australian
cents, 1.2179 Deutsche marks, 38.40 p, and 88.068 yen. In Sydney, the Australian dollar closed higher but off the day’s peak because of late profit-taking and an easing in interest rates from midday highs. It closed at U581.22/27C, up from an opening of 80.65 c, but off the day’s peak of 81.55/60C. It closed in Sydney on Tuesday at 80.55/60C. Strong economic growth indicated in local gross domestic product (GDP) data, released yesterday, sent the dollar up and interest rates jumped on a higher than expected March quarter, 1988, increase of 1.8%. But profit-taking and some easing in interest rates led the currency back to the close. The Australian dollar pushed higher on the Reserve Bank’s trade-weighted index to 59.6 points from 59.1 in early trading and up from 58.9 on Tuesday. The index is currently at its highest since June 3, 1986. The currency closed at 5NZ1.1558, compared with 5NZ1.1615 at 7 the Tuesday close. In New York on Tuesday
(early yesterday. New Zealand time), the United States dollar closed higher as firm interest rates and strong technical factors continued to fuel bullish sentiment. “Clearly it is interest rates that are driving this rally,” said a senior dealer at a large bank. “Interest rate differentials between the United States and other countries are wide and people expect capital flows into the United States in the near-term.” The dollar rallied on Monday while American and British markets were closed for holidays, setting the stage for Tuesday’s gains. The dollar closed at 1.7320/30 Deutsche marks, compared with 1.7165/75 at Friday’s close, and 125.15/25 yen against 124.85/95. Some dealers said increased corporate buying interest was behind the gains. The Federal Reserve Board is widely believed to have allowed the Federal funds rate to creep up to an equilibrium level of at least 7%% from 7% to 7%% after news that the March United States trade gap narrowed to 5U59.75 billion .and exports that month rose to record levels.
On Tuesday Federal funds traded as high as 7%%, boosted by technical factors, despite a modest injection of liquidity by the central bank at midday. But dealers expect the Federal Reserve Board to wait for May employment data on Friday before making a decision to raise interest rates further. If the jobs data are strong, dealers said market participants expect the board to raise the 6% discount rate to 6.5%. The yen eased little against the dollar, despite news that Japan’s custom-cleared trade surplus for the first 20 days of May fell to SUSI. 63 billion from SUS2.B4 billion a year ago. A spokesman for the Japanese Prime Minister, Mr Takeshita, said at the United Nations that the yen was too high against the dollar and its strength was hurting the Japanese economy. But if the dollar beachesresistance at 125.25/30 yen, the door may open to further dollar gains. “It would be significant in that all the major currencies would then be in a downtrend against the dollar on the charts,” a dealer said.
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Press, 2 June 1988, Page 23
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662Kiwi leaps 1c: post-float high Press, 2 June 1988, Page 23
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