Tuesday 24th September 2013
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The New Zealand dollar pared an earlier decline after Fonterra Cooperative Group, the nation's biggest exporter, hiked its forecast payout to farmers for the second time in as many month
The kiwi traded at 83.33 US cents at 5pm in Wellington climbing from as low as 83.11 cents earlier in the day. The currency had fallen from as much as 8am and 83.63 cents yesterday. The trade-weighted index declined to 77.61 from 77.86.
The local currency got a fillip in late trading when Fonterra said it expected to hikes its forecast payout to farmers by 50 cents per kilogram of milk solids to $8.50/kgMS, on the strength of international demand for dairy products.
"We had expected global milk prices to fall over the course of the season as New Zealand supply recovered from drought and as emerging market economies slowed. Instead, global milk prices have remained extremely high," Westpac Banking Corp chief economist Dominick Stevens said in a note. "High prices have prevailed right through the period of peak volumes at the fortnightly GlobalDairyTrade auctions, and hence revenues must have been much higher than anticipated at the start of the season."
The Fonterra news slowed a decline as investors exited the kiwi in favour of the Australian dollar after yesterday's better-than-expected Chinese manufacturing figures. Australia has greater exposure to the world's second-biggest economy due to its resources sector. The kiwi fell to 88.47 Australian cents from 88.72 cents yesterday.
"We had good manufacturing figures out of China yesterday, and that's lifted the Aussie more than the kiwi," said Michael Johnston, senior trader at HiFX in Auckland. "The weaker kiwi/Aussie has spilled over into the kiwi/US" as international investors sold the local currency, he said.
Investors are mulling the decision by the US Federal Reserve not to start tapering its money printing programme last week as expected, and were thrown a curve-ball in Northern Hemisphere trading by two Fed officials giving conflicting views on the surprise.
The kiwi dollar fell to 82.34 yen at 5pm in Wellington from 82.88 yen yesterday, and was little changed at 61.79 euro cents from 61.81 cents. It fell to 52.01 British pence from 52.21 pence yesterday.
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