SNZ backs off

Press, 7 September 1989, Page 22

SNZ backs off

PA Wellington The New Zealand dollar closed marginally easier at U558.85/95C yesterday, compared with Tuesday’s finish, after another quiet day of narrow trading. The kiwi opened at 58.76/86, slightly down on Tuesday’s close of 58.80/90 before firming slightly in early trading. The kiwi had held out well overnight in spite of a strong United States dollar, a dealer said.

There was some support for the currency during the day, but it was at the lower end of its 30-point range that saw it briefly test the US59c level, a dealer said. Dealers had said earlier that with no local data of any interest they expected action and range-trading through the United States dollar.

They expected the kiwi to remain quiet because the U.S. dollar had lost a little ground in New Zealand trading. . On the cross rates at the close, the kiwi had slipped against other major currencies to be worth Aust77.44c, 1.16 marks, 38.07 p, 86.34 yen and 1.0067 Swiss francs. Tlie kiwi was still holding firm on the Reserve Bank trade weighted index, a dealer said. The index closed exactly as it opened on 62, slightly up from Tuesday’s closing fix of 61.9. Both a week and a month ago it closed at 61.4 and before the kiwi was floated on March 4, 1985, the index was fixed at 61.2. The U.S. dollar ended higher on Tuesday (early yesterday N.Z. time), overcoming central bank selling on the back of technical factors and belief United States Interest rates will remain firm. < . . J

Dealers said concerted dollar sales by the Federal Reserve and 12 central banks initially sparked buying of dollars on the dips, but fears of more action helped dampen enthusiasm. “It’s a cat and mouse game. How far can you push it before they get serious,” said Michael Miskulin of the Industrial Bank of Japan in New York, adding he expects a higher dollar. The dollar finished at 1.9880/90 marks, up from Friday’s close of 1.9810/20, and at 146.80/90 yen versus 145.95/05. The dollar hit peaks of 1.9938 marks and 147.20 yen in early trading, but profit-taking and position-squaring helped trim the gains. The Fed intervened four times, selling an estimated $3OO million to $4OO million. The Fed sold dollars for marks three times, between 1.9875-1.9920 marks. It also sold at 146.70 yen. Further concerted and aggressive central bank action was necessary to stem further dollar rises, and 2.01 marks and 148 yen were possible tests this week, dealers said. Solid support is seen at 1.9750 marks and 145.75 yen. Resistances at 1.9950 and 147.50 must be overcome in order to hit higher levels, dealers said.

In London, sterling showed little independent movement and ended down at 90.7 on its trade-weighted index from Monday’s closing 91.2 and the opening 91.0. Dealers noted the pound had eased slightlyon the crosses since last we.ek Sterling ended down at U51.5395/5405 from Monday’s closing 1.5585/635 and the opening 1.5455/65.