NZ dollar holds above 82 US cents as PM Key tries to talk currency down
The New Zealand dollar held above 82 US cents after Prime Minister John Key tried to talk it lower, calling the currency “overvalued”, even as the country’s economic growth looks set to outpace the UK, the European Union, the US and Japan this year.
The New Zealand dollar was virtually unchanged at 82.01 US cents at 8am from 82 cents yesterday at 5pm. The trade weighted index decreased to 73.12 from 73.29
Traders largely ignored the Prime Minister’s jawboning, after Key said “we’re considering what we can do to resist a rising exchange rate” and “kiwi strength was the result of weakness in US and European economies.” He is on a trade mission in Jakarta, Indonesia, and was speaking at the Association of Southeast Asian Nations headquarter. The kiwi has gained 5.4 percent against the greenback so far this year.
“Suggestions from Prime Minister Key that the currency is overvalued knocked some steam out of the New Zealand dollar last night,” said Mike Jones, market strategist at Bank of New Zealand. “There is very little the government can do to lean against the strong New Zealand dollar - this is something Key himself noted overnight.”
In March, Reserve Bank Governor Alan Bollard said the high kiwi dollar was reducing the need for him to hike rates from a record-low 2.5 percent.
The New Zealand dollar fell to 62.43 euro cents from 62.91 cents after the yield on Spanish 10-year government bonds fell from an intra-day high 6.16 percent on reports euro-zone members may intervene as soon next month.
Spanish Prime Minister Mariano Rajoy has been struggling to convince investors he can get the country’s finances under control after failing to meet deficit targets set by the European Commission and the previous government.
Spain is set to sell two- and 10-year bonds on Thursday, while Germany is also preparing to sell debt this week.
In the US, the world’s largest economy, data was mixed with a report showing retail sales rose 0.8 percent in March. Economists had predicted a 0.3 percent increase. Separate reports indicated that manufacturing in the New York region grew at the slowest pace in five months in April, while confidence among homebuilders dropped.
“The sideways trend in the kiwi dollar masks what was a weak performance overnight,” Jones said. “The kiwi was the only currency that didn’t benefit from a weaker US dollar.”
The Reserve Bank of Australia will release the minutes from its March meeting today after the central bank held its target cash rate at 4.25 percent. The Bank of England will release the minutes from its March meeting on Wednesday.
There is no significant data set for release in New Zealand today. Fonterra Cooperative Group will hold an auction on its GlobalDairyTrade today in the US.
The New Zealand dollar fell to 79.21 Australian cents at 8am from 79.39 cents yesterday. The kiwi slipped to 51.58 British pence from 51.71 pence yesterday and 65.98 yen from 66.16 yen.
Comments from our readers
No comments yet
Add your comment:
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