Sharechat Logo

NZ dollar gains as relatively high yields, economic stability lifts appeal

Thursday 27th September 2012

Text too small?

The New Zealand dollar rose against most major currencies as more uncertainty in Europe drew offshore investors to the nation's relatively high yields and economic stability.

The kiwi dollar rose to 82.32 US cents from 81.96 cents at 5pm in Wellington yesterday. The trade-weighted index climbed to 73.28 from 72.95.

The euro weakened after Spain's central bank said the indebted nation's gross domestic product fell this quarter, spurring a selloff in government bonds, underlining the region's debt crisis. New Zealand interest rates are a standout among strongly-rated nations, with 90-day bank bills trading at 2.67 percent, compared to 0.106 percent for US 3-month Treasury bills and 0.03 percent for German 6-month bills.

"There's real money coming into the kiwi, possibly in a safe-haven attempt," said Stuart Ive, a currency strategist at HiFX. "From an offshore point of view you've got to be looking at the yield. With all the problems in Europe there has been a flight of money."

The New Zealand dollar rose to 79.54 Australian cents, the first time it has broken above 79.50 cents since early April, from 79.14 cents yesterday.

Ive said while both Australia and New Zealand are commodity-exporters, Australia's shipments of raw materials are hard commodities while New Zealand was a food producer.

"The world will still need to eat," he said.

Fonterra Cooperative Group, New Zealand's biggest exporter, yesterday reported a 19 percent drop in its payout to farmers. Still, annual volumes climbed to 3.94 million tonnes and the Auckland-based company said there has been some recent recovery in prices after they fell to a 34-month low in May.

Traders today will be eyeing the National Bank Business Outlook for September. New Zealand business confidence rose in August, with an increase in construction investment intentions.

The kiwi dollar rose to 63.97 euro cents from 63.65 cents and rose to 50.94 British pence from 50.69 pence. The local currency climbed to 63.93 yen from 63.72 yen. 

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington

IRG See IRG research reports