Kiwi dollar firms in narrow range

Press, 1 April 1989, Page 30

Kiwi dollar firms in narrow range

PA Wellington The New Zealand dollar followed the narrow-range pattern of the week and at the close of the financial year last evening was trading slightly firmer at U 561.55/ 65c. The kiwi opened at 61.40/ 50, slightly down on Thursday’s close of 61.50/60. The kiwi traded through the day in a tight 25-point range.

There was exporter demand when it dipped to 61.40/50, then there was selling out of the United States when it topped 61.70/80.

On the cross rates at today’s close the kiwi had firmed marginally against other major currencies throughout the day and was worth Aust7s.loc, 1.16 marks, 36.49 p, 81.58 yen, and 1.01 Swiss francs. The Reserve Bank trade weighted index closed at 60.9, slightly up on its opening fix of 60.8. It closed at 60.9 on Thursday, 61.0 a week ago and a month ago at 60.7. In Sydney the Australian

dollar ended the week quietly as banks squared their books for the quarter, and Tokyo markets ended their financial year.

The dollar ended at U581.95/00c from Thursday’s 81.92/97 finish, after trading listlessly in a 30 point range.

Dealers said the market was also awaiting the outcome of this weekend’s Group of Seven meeting in Washington, at which intervention levels will be discussed. The dollar had been “well and truly stuck” between 0.8190 and 0.8220 in early trade, and little further movement was expected overnight. Against the Kiwi, the Australian dollar eased to 5NZ1.3273./02 from 1.3277/ 06.

In New York, Federal Reserve selling of dollars for yen for the first time in years knocked the dollar down steeply against many currencies on Thursday (early yesterday, N.Z. time).

Dealers said the dollar sales at 133.20 yen surprised many market participants. “It

fell like a stone,” one trader said.

The dollar fell to a low of 131.75 yen immediately and ended the day at 131.85/95 compared with Wednesday's 133.30/35.

The selling, in co-ordina-tion with the Bank of Canada, showed the Group of Seven leading industrial nations’ resolve to defend the 1987 Louvre accord, dealers said. That pact is thought to have set reference ranges of 1.70 to 1.90 marks and 120 to 140 yen.

The last time central banks intervened to sell dollars for yen was in November, 1985, at a level slightly above 200 yen, dealers said. Before the yen-buying intervention, the dollar surged to 1.9035 marks. But it fell steeply and ended at 1.8890/ 00 marks, down from Wednesday’s 1.8940/45.

Dealers said the dollar had hit a temporary ceiling and would remain within the reference range for some time, regardless of what the G-7 might say after its weekend meeting.