Kiwi near US62c

Press, 14 September 1988, Page 37

Kiwi near US62c

NZPA Wellington The New Zealand dollar showed some resilience in late trading after a weak opening yesterday. It closed at U561.90/00c after opening at U 561.70/ 80c and trading to a high of 62.45 and a low of 61.43. There was early nervousness after a BERL forecast for lower inflation and interest rates in New Zealand. Some early offshore selling, mainly in the United States, caused the initial weakness in , the kiwi dollar, but a large sale of the currency out of Auckland helped it to settle, dealers said. Afternoon selling from Asia saw the kiwi dollar trade between 61.80 and 62.20 in what one dealer described as a quiet but messy market. Dealers generally expect a quiet day again today but a busier time on Thursday after the release of the U.S. trade figures. On the cross-rates at the close the kiwi dollar was worth Aust77.67c, 1.14 marks, 36.47 pence, 82.44 yen, and 96.33 Swiss francs. The Reserve Bank trade-weighted index closed on 61.9, slightly up on - its opening fix of 61.6 but down on Monday’s close of 62.2. In Sydney yesterday the Australian dollar closed lower but consolidated around key chart support lines after sliding in early

trading beneath USBOc. A softer U.S. dollar, especially against the yen, lent support to the Australian dollar at the currency’s lower levels. The Australian dollar closed at U579.75/80C down from Monday’s close of 80.15/ 22c. It had started at 79.65/70. The Australian dollar finished at $NZ1.2825/65, compared with $NZ1.2876 on Monday. In New York on Monday (early yesterday, New Zealand time), the United States dollar closed a dull session modestly weaker, as activity essentially evaporated ahead of U.S. trade data on Wednesday (U.S. time). “The sluggishness is a condition that’s likely to persist at least until Wednesday’s trade numbers,” said a- dealer. “The market’s uncertain here, and most dealers don’t feel they can justify any major trade until then.” Comments by the Bundesbank President, Dr Karl Otto Poehl, that he was satisfied with current dollar levels had little impact. The dollar closed at 1.8460/65 marks and 133.35/45 yen, down from 1.8505/15 and 133.65/75 at Friday’s close. Dr Poehl’s remarks at the Bank for International Settlements meeting in Basle, Switzerland, came after modest i dollar sales by the Bundesbank on Monday morning. Asked

about the dollar’s current level, Dr Poehl said, “It does not present any problems for us or the U.S.” The American trade deficit for July is expected to be SUSII.2 billion, down from June’s SUSI2.S billion imbalance. “The trade number would have to be below SUSIO billion to have any lasting benefits for the dollar,” said one dealer. “Over SUSI2.S billion would get the market attacking the dollar.” A secondary issue for the market will be the performance of U.S. interest rates. The sharp decline in American bond yields in the last week had taken the edge off the dollar’s attractiveness, traders said, although bond yields rose slightly on Monday, closing at 9.04 per cent from 8.99 per cent on Friday.