NZ dollar reaches 5-year high vs. yen after BOJ 'game-changer'

Monday 8th April 2013

The New Zealand dollar rose to a five-year high against the yen following the Bank of Japan's announcement last week of much greater quantitative and qualitative easing to end deflation and weaken its currency.

The kiwi rose to 82.61 yen and earlier reached 82.68 yen, the highest since May 2008, from 82.21 yen in New York on Friday. It slipped to 84.13 US cents from 84.31 cents as equity markets fell in the wake of weak US payrolls data.

BOJ Governor Haruhiko Kuroda last week announced plans yesterday to double monthly bond purchases to about 7.5 trillion yen as he seeks to achieve 2 percent annual inflation in two years. Billionaire investor George Soros and Pacific Investment Management bond fund manager Bill Gross have both said the plan risks weakening the yen, Bloomberg reported.

"With the BOJ's game changer we can expect more strength in the kiwi against the yen," said Mike Jones, strategist at Bank of New Zealand.

Jones also expects further deterioration in US dollar sentiment after the Labor Department said payrolls increased by 88,000 workers in March against forecasts of 200,000 new jobs, adding to concern the world's biggest economy is experiencing a further bout of weakness.

The trade-weighted index edged up to 77.69 from 77.64 in late New York trading on Friday.

The kiwi slipped to 81.09 Australian cents from 81.23 cents and was little changed at 54.96 British pence. It was at 64.86 euro cents from 64.89 cents.

BusinessDesk.co.nz

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