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NZ dollar gains vs. Aust counterpart as RBA says currency 'still uncomfortably high'

Tuesday 5th November 2013

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The New Zealand dollar gained against its trans-Tasman counterpart after the Reserve Bank of Australia kept its key rate unchanged and said the Australian currency is "still uncomfortably high".

The kiwi gained to 87.20 Australian cents at 5pm in Wellington from 86.97 cents immediately before the RBA statement and 87.05 cents yesterday. The kiwi traded at 82.67 US cents at 5pm from 82.80 cents at 8am and 82.51 cents yesterday.

The RBA kept the target cash rate at a record-low 2.5 percent as it continues to see the effects of low interest rates feed into an economy it's trying to revive. Governor Glenn Stevens the Australian dollar is "still uncomfortably high" and that it needs to fall "to achieve balanced growth in the economy." The Australian dollar fell to 94.75 US cents at 5pm in Wellington from 94.98 cents before the release.

"If we get a situation where the RBA is on hold and the RBNZ is hiking, we should see the kiwi/Aussie really lift," said Chris Tennent-Brown, FX Economist at Commonwealth Bank of Australia in Auckland. "That's probably set for some stage of next year."

Investors are eyeing employment figures in New Zealand, Australia and the US over the next three days, with the American non-farm payrolls likely to attract the most attention as traders assess the strength of the world's biggest economy.

New Zealand's jobless rate fell 0.1 of a percentage point to 6.3 percent and the participation rate crept up the same amount to 68.1 percent in the September quarter, according to a Reuters survey of economists.

CBA's Tennent-Brown said the participation rate might rise higher than expected on the strength of recent migration data, though that could also mean jobs growth won't offset the headline unemployment rate which the currency typically trades off.

The local currency was little changed at 81.40 yen at 5pm in Wellington from 81.48 yen yesterday, and traded at 61.22 euro cents from 61.21 cents. It slipped to 51.76 British pence from 51.81 pence yesterday.

 

BusinessDesk.co.nz



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