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NZ dollar rises against Aussie as China-US trade strife escalates

Thursday 9th May 2019

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The New Zealand dollar rose against the Australian dollar after US President Donald Trump accused China of breaking the trade deal the two countries are still negotiating.

Trump is threatening to raise tariffs on Chinese imports on Friday.

The kiwi was trading at 94.25 Australian cents at 5pm in Wellington from 94.02 at 7.45am. It was trading 65.72 US cents from 65.73, while the trade-weighted index was at 71.98 points from 71.87.

“The Australian dollar has moved down more against the US dollar,” says Imre Speizer, market strategist at Westpac.

That’s largely because its mining exports, such as coal and iron ore, are more exposed to international price fluctuations than New Zealand’s predominantly agricultural products, Speizer says.

President Trump told a rally of supporters in Florida that China had broken an agreement.

“By the way, you see the tariffs we’re doing? Because they broke the deal. They broke the deal,” Trump told the crowd. “So they’re flying in, the vice premier tomorrow is flying in – good man – but they broke the deal. They can’t do that, so they’ll be paying.”

Trump, who appears not to understand that US consumers are hurt by tariffs on Chinese goods, added that the US “won’t back down until China stops cheating our workers and stealing our jobs.”

China’s Vice-Premier Lui He is expected in Washington and, until Trump started threatening over the weekend to raise tariffs, financial markets had thought the two nations had been close to signing a trade agreement.

China’s government has issued a statement promising “necessary” countermeasures if Trump imposes more tariffs.

“Escalating the trade conflict is not in the interest of the people in both countries and the world,” the Commerce Ministry said in a statement.

“China deeply regrets the move.”

The domestic currency was trading at 50.50 British pence from 50.53. It was unchanged at 58.70 euro cents, at 72.25 Japanese yen from 72.35, and at 4.4737 Chinese yuan from 4.4577.

The New Zealand two-year swap rate rose to 1.6005 percent from 1.5793 yesterday while the 10-year swap rate fell to 2.1300 percent from 2.1550.

(BusinessDesk)

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