$NZ closes firmer

Press, 6 December 1989, Page 43

$NZ closes firmer

PA Wellington The New Zealand dollar finished a little higher than its opening levels in Wellington yesterday but dealers said the dull trading which has characterised the market recently was continuing. The New Zealand dollar opened at U 558.97/ 07c, and after trading in a narrow range, with a high of U559.12C and a low of 59.90 c for the day, closed at U559.05/15c. Dealers said there was nothing influencing direction although the tone was marginally bullish against the U.S. dollar. “We might be building up a bit of a buying backlog,” one dealer said. The-New Zealand dollar improved against the Deutsche mark, opening at 1.0526 and hitting 1.0529 by late morning to finish at 1.0554. On the cross-rates the New Zealand dollar finished at 37.7 p (37.73 at opening), 84.971 yen (84.620) and 0.9506 Swiss francs (0.9458). The Reserve Bank trade-weighted index was 61.0 at close, the same as it opening and the rest of the day’s fixes. It was 60.9 on Monday, 60.8 one week ago, and 60.7 four weeks ago. In Sydney yesterday, the Australian dollar traded in a tight range and closed almost steady after locals sold the unit, which was then supported from Asian centres. The Australian dollar closed at U578.20/27C, marginally up from 78.16/23c at Monday’s finish. Dealers said it traded in a 77.90 c to 78.20 c band. The Australian dollar closed at $NZ1.3177/

3211 c, compared with $NZ1.3204/38 on Monday. In New York on Monday (early yesterday, N.Z. time), the U.S. dollar closed narrowly mixed in quiet trading, but firmed across the board from its New York opening in a technical reaction to its recent descent. The dollar ended at 1.7833/40 Deutsche marks, down from Friday’s finish of 1.7865/75 Deutsche marks. It finished at 143.60/70 yen, up from 143.39/49 yen Friday. The yen’s weakness stems largely from the failure of the Bank of Japan (BOJ) to raise the discount rate, currently 3.75 per cent. Several weeks ago, the BOJ was expected to hike the rate imminently. But with the Governor of the BOJ, Mr Satoshi Sumita, retiring this month (he will be replaced by his deputy) the central bank is seen as unlikely to move soon. In addition, the upcoming Japan lower house Diet election, which is likely to occur in February, adds an element of uncertainty to the picture surrounding the yen. The mark’s strength is expected to continue. The currency benefits from firming West German interest rates, the market's belief these rates have further to climb and from Eastern Europe’s political liberalisation, which is seen as ultimately strengthening the West German economy. The dollar’s recent weakness owes to the slowdown of the U.S. manufacturing sector and economists’ belief that this deterioration will lead the Federal Reserve System to ease credit conditions further.