Kiwi drifts down in quiet trading

Press, 21 October 1989, Page 33

Kiwi drifts down in quiet trading

PA Wellington The New Zealand dollar drifted down into the long week-end on quiet trading yesterday to close 17 points lower. The Kiwi closed at at U559.05/15 against an opening of 59.32/42 and Thursday’s close of 59.22/32. After yesterday’s stable trading the dollar finished the week almost USlc higher than its Monday opening of 58.10/ 20.

“There has been little overseas interest in the dollar, people have been side-tracked by interest in sterling and the mark,” a dealer said about yesterday’s trading. Traders said they expected little fluctuation in the currency over the long week-end, anticipating only minor interest in the kiwi until Australia’s September consumer price index and balance of payments figures were released next week.

The kiwi could gain next week against the Australian dollar if the data proved negative, dealers said. On the crossrates at yesterday’s close the Kiwi was down against most major currencies. It was worth Aust76.2l (76.7), 1.09 marks (1.09), 37.06 p (37.18), 83.74 yen (83.80) and 0.9555 Swiss francs (0.9621). The Reserve Bank trade-weighted index closed at 60.9 against its opening fix of 61.0. A week ago it closed at 60.8 and a month ago at 61.7. In Sydney yesterday corporate selling orders brought the Australian dollar down from the day’s U577.73c high and the currency finished slightly lower in quiet trade. '

■lt closed at 77.18/25, down from 77.43/ 50 at noon and just off Thursday’s 77.23/ 30 finish.

“Basically it shouldn’t have got up to the high 77s but the only reason it did was because the market was short,” one dealer said.

In New York on Thursday (local time) the United States dollar ended mixed after maintaining a generally well-bid tone for the latter part of the day, but trading was largely featureless. Despite Wall Street’s rise, concern over continued stock stability dissuaded active buying. However, United States interest rates may not be headed lower now, and persistent dollar demand, especially against the yen, has boosted sentiment. The dollar ended at 1.8470/75 marks versus 1.8487/95 on Wednesday. The dollar finished at 141.80/90 yen, up from 141.40/48 at Wednesday’s close. The greenback hit lows of 1.8375 marks and 140.90 yen shortly after release of a lower-than-expected 0.2 per cent rise in the United States September Consumer Price Index. However, the dollar managed to rebound above support at 1.8400 marks. In spite of the weak CPI, economists said the Federal Reserve Board would wait for more data before easing credit further.

The Fed drained reserves temporarily from the banking system through fourday matched sales. While there was a fundamental need to drain reserves, economists also saw the action as a sign that the Fed might believe the stock market is fairly stable for the time being.