Sharechat Logo

NZ dollar soars to 7-year high against weak yen on Abe poll plans

Wednesday 12th November 2014

Text too small?

The New Zealand dollar soared to the highest in more than seven years against the yen on reports Prime Minister Shinzo Abe will call a snap election, seeking a mandate for further economic reforms including an increase in sales tax.

The kiwi touched 90.33 yen, its highest level since October 2007, and was trading at 90.21 yen at 8am in Wellington, from 89.06 yen at 5pm yesterday. The local currency advanced to 78.09 US cents from 77.48 cents yesterday following the Nov. 11 Veterans Day US public holiday.

The yen weakened as speculation mounts that Japan's Abe may call a snap poll before the end of the year to seek a mandate for a planned second increase in the country's sales tax to 10 percent from next October. The tax rate was first raised to 8 percent in April as part of a broader plan to rebalance the economy. While an election is not required until 2016, commentators say Abe may seek voter support for the unpopular tax hike while the opposition is fragmented.

"The idea is that he would go to a snap election to make sure he has still got a mandate to continue with the policies of Abenomics," said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand. "The markets appear to have taken that one directionally, that he will get the mandate which will increase their ability to enact the difficult policy reform that is necessary for the rebalancing of the Japanese economy. All the political commentators are saying that it is a good time to go and a good time to cement and increase gains."

The economic reform policies, known as Abenomics, have a side impact of weakening the yen, ANZ's Tuck said.

In New Zealand today, the focus is on the Reserve Bank's latest Financial Stability Report, scheduled for release at 9am. Traders are looking for an update on the bank's continuation of its loan to value mortgage lending restrictions.

The New Zealand dollar rose to 89.84 Australian cents from 89.68 cents yesterday, gained to 62.54 euro cents from 62.33 cents and advanced to 49.04 British pence from 48.90 pence. The trade-weighted index rose to 77.31 from 76.87 yesterday.

 

 

 

 

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 sags after avalanche of data and central bank action
Fonterra board starts planning chair succession
Fulton Hogan keeps Australian civil construction unit
Time for congestion pricing has come - NZIER
Colliers defends KiwiBuild as 'far from a colossal failure'
Pushpay shares rise as cost-cutting upgrades earnings guidance
20th September 2019 Morning Report
NZ dollar weaker against British pound on EC president's Brexit optimism
Todd plans Kapuni drilling campaign
MARKET CLOSE: NZ shares gain; appetite for KFC helps Restaurant Brands hit record

IRG See IRG research reports