Kiwi rallies as greenback comes under more pressure

The New Zealand dollar gained against the US dollar which fell amid worries about escalating US-China trade tension added to fears of a global trade war.

The kiwi traded at US72.84c yesterday afternoon from US72.54c at 8am and US72.26c late Tuesday. The trade-weighted index rose to 74.85 from 74.20.

The US dollar came under renewed pressure when the Office of the US Trade Representative re- vealed plans for a 25 per cent tariff on 1300 items imported from China, including items that range from malaria diagnostic test kits to new tyres for aircraft, straw balers, and combine harvest-threshers. China was quick to respond, vowing to take counter-measures.

“The kiwi dollar is flying . . . the market is taking the Trump stuff as anti-US dollar,” said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank. Both the kiwi and the Aussie also got a lift when Australian retail sales rose 0.6 per cent in February, led by a rebound in department store sales following several poor months.

The kiwi traded at A94.55c from A93.94c Tuesday and Kelleher said the kiwi may be outperforming the Australian dollar giving ongoing worries about hard commodity prices, in particular, iron ore which has fallen sharply since early March.

For New Zealand, while dairy prices fell in the overnight Global Dairy Trade auction, the slide was led by anhydrous milk fat. Whole milk powder, which makes up the bulk of product on offer, rose 1.6 per cent to US$3278 a tonne, which likely also helped support the kiwi.

The kiwi dollar rose to 59.33c from 58.70c late Tuesday and traded at ¥77.61 from ¥76.55. It rose to 4.5832 yuan from 4.5428 yuan and gained to 51.71 British pence from 51.39 pence. — BusinessDesk