Kiwi claws back on ‘hyped’ sharemarkets

The New Zealand dollar recovered much of its losses earlier this week after sentiment in equities markets improved, partly due to the hopes that an existing antiviral treatment will prove effective in treating patients suffering from the Covid-19 virus.

The kiwi was trading at US60.18c yesterday from US59.55c on Thursday and appears headed to end the week about half a cent below last week’s close in New York at US60.78c.

The trade-weighted index was at 68.36 from 67.90.

“It started with a rally into the close in US equities markets,” said Mark Johnson, an adviser at OMF.

Gilead, a US biotechnology company that researches, develops and commercialises drugs, has reported its antiviral drug — which failed clinical trials as a potential Ebola cure — had resulted in rapid recoveries in people with fever and respiratory symptoms from Covid-19. Medical experts have warned people not to place too much store in the news until after the drug has gone through clinical trials.

“I feel most of this market move is based on hype,” Johnson said

“A bear market never finishes on one single massive sell-off without coming back to test the lows,” he said. “I’m a little bit perplexed about the way the equities markets have rebounded — that’s why I feel it’s on hype rather than actual evidence.”

The New Zealand dollar was trading at A94.52c from A94.83c at 5pm on Thursday. It was at 48.14 British pence from 47.72p, at

55.35 euro cents from €54.73c, at 64.83 yen from ¥64.29 and at 4.2591 Chinese yuan from 4.2174.

The bid price on the two-year swap rate closed at 0.3300 per cent from 0.3725 on Thursday, while 10-year swaps were at

0.8950 per cent from 0.8925.